The recent massive rally in the crypto market was driven by the Bitcoin spot market, with on-chain analysis providing insights into the current state of the market cycle. Bitcoin spot volumes peaked at $14.1 billion in March, similar to levels seen during the 2020-2021 bull market. However, volumes have since cooled to around $7 billion per day in April. Net exchange flows, which include inflows and outflows from Bitcoin exchanges, have also increased significantly, reaching $8.19 billion per day, indicating strong support for Bitcoin’s price action in 2024.
One major development in the Bitcoin spot market this year has been the emergence of U.S. Bitcoin spot ETFs, which now account for 30% to 50% of the major forces affecting Bitcoin’s spot price. The impact of Bitcoin ETFs on spot trading is particularly noticeable on weekends when these funds do not trade, leading to lower on-chain spot volumes. Exchanges have also exhibited a taker-buy volume bias, with spot volume delta against maker-sell volume reaching $143.6 million last month, reversing the net sell side bias seen in 2023.
Bitcoin recently broke its 2021 all-time high of $69,000 in March and has been consolidating close to that peak ever since. The lack of major pullbacks following the all-time high break indicates that the current bull market is still in its early stages. Capital invested by short-term holders (less than 6 months) has reached peaks of 84% to 95% in previous bull cycles. Currently, this figure stands at 47%, suggesting a more balanced distribution of capital between long-term holders and new demand within the Bitcoin holder base.
Through on-chain analysis, Glassnode has identified several similarities between the current market conditions and the 2020-2021 bull run. Bitcoin’s 30-day moving average for volume is significantly higher than its 180-day average, indicating increased trading activity. Additionally, net exchange flows are higher than in 2021, supporting Bitcoin’s price action. Despite this, the current euphoria phase of the bull market is still in its early stages, with minimal major pullbacks observed since Bitcoin broke its all-time high in March.
The analysis also highlights the impact of Bitcoin ETFs on spot trading and how these funds have influenced on-chain spot volumes and trading patterns. The increased presence of ETFs in the market has led to shifts in trading behavior on weekends and a notable taker-buy volume bias on exchanges. These factors, along with the overall increase in spot trading volume and exchange flows, indicate strong support for Bitcoin’s price action in 2024. Looking ahead, it will be important to monitor the balance between long-term holders and new demand within the Bitcoin holder base to assess the sustainability of the current market cycle.
