Most Bitcoin holders are now making a profit, according to blockchain data.

Bitcoin (BTC) Price Surges Near All-Time High, Returning Nearly All Digital Currency Holders to Profit.

###### Image Source: Andrew Throuvalas

With Bitcoin (BTC)’s price quickly re-approaching its all-time high, almost all holders of the digital currency are back in the black.

Blockchain market intelligence platform IntoTheBlock stated on Wednesday that 95% of Bitcoin addresses are now in profit – the largest share since BTC traded for roughly similar prices in November 2021.

Will Bitcoin Bull Run Continue?

Though profits are great for investors, a big portion of the market being in the green can also mean the market is overheated, and that a large number of holders may take money off the table.

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IntoTheBlock recommends gauging market heat using the MVRV ratio – which measures the “market value” of all BTC against the “realized value” of when they were last traded.

“While it historically signaled a top when MVRV was close to 4, the number has declined every cycle,” the company wrote in a post on Tuesday. “The current value is 2.22.”

More on-chain data published by Glassnode suggests that more speculative trading activity is already starting to return to BTC. For example, Bitcoin inflows to exchanges are nearing all-time highs, with those flows predominately coming from short-term holders more likely to be interested in speculative activity.

What’s Driving Up Bitcoin’s Price?

Bitcoin’s price surged to $57,000 on Monday, breaking another two-year high as Bitcoin ETFs continue absorbing a tsunami of inflows. The newly launched funds took in another $520 million on Monday alone, with BlackRock’s iShares Bitcoin Trust scoring a record $1.3 billion in daily volume.

Several analysts believe Bitcoin ETFs will be a primary catalyst for taking the asset back to its all-time high of $69,000 – possibly before the Bitcoin network’s “halving” event in April.

This would be unprecedented for BTC, which has historically soared to new highs after – and arguably because of – the halving itself. When it occurs next, the number of BTC produced per day will fall from 900 to 450 coins.

IntoTheBlock noted this pattern, claiming the halving could “suggest a potential upswing in price.”

“This cycle deviates from the past, with prices rallying earlier than expected,” the firm added. “This could indicate that investors are anticipating and acting upon the ‘halving effect’ well in advance.”

Last week, Fundstrat’s Tom Lee predicted that both ETFs and the halving could drive Bitcoin’s price to reach $150,000 by the end of 2024.

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Q&A

Q: What does it mean that 95% of Bitcoin addresses are in profit?

A: This means that the current price of Bitcoin is higher than the price at which 95% of Bitcoin addresses acquired their BTC. This is a positive sign for investors, indicating that the majority of Bitcoin holders are currently making a profit.

Q: Can the market being in the green be a bad thing?

A: While it is generally good for investors when the market is in the green, it can also suggest that the market is overheated. This may lead to a large number of holders taking profits and potentially causing a market correction.

Q: What is the MVRV ratio and how is it used to gauge market heat?

A: The MVRV ratio compares the “market value” of all BTC with the “realized value” of when they were last traded. It helps determine if the market is overvalued or undervalued. Historically, when the MVRV ratio was close to 4, it signaled a market top. The current MVRV ratio is 2.22, indicating that the market may still have room to grow.

Q: What is the Bitcoin halving and how does it affect the price?

A: The Bitcoin halving is an event that occurs approximately every four years, where the number of new BTC produced per day is cut in half. This reduction in supply has historically led to an increase in the price of Bitcoin. The upcoming halving, scheduled for April, could potentially drive the price to new all-time highs.

Future Outlook and Investment Recommendations

Based on the current market trends and the upcoming Bitcoin halving event, it is possible that Bitcoin’s price will continue to rise. The influx of investments into Bitcoin ETFs, along with the anticipation of the halving effect, could be driving the current bull run. Analysts, such as Tom Lee from Fundstrat, predict that Bitcoin’s price could reach $150,000 by the end of 2024.

Investors should closely monitor market indicators, such as the MVRV ratio, to gauge market heat and potential risks. It is essential to stay informed about market trends and make well-informed investment decisions.

Overall, while Bitcoin’s bull run is exciting, it’s crucial to approach investment decisions with caution and conduct thorough research.

References:

• IntoTheBlock’s Tweet on Bitcoin Profitability
• Glassnode’s On-Chain Data Analysis
• Bitcoin ETFs Absorb $520 Million, Grayscale Outflows Reach New Low
• Andrew Throuvalas – Bitcoin Not Taking Off as Mainstream Payment, BoE Governor
• Follow Us on Google News

Now, it’s your turn to share your thoughts on Bitcoin’s bull run and the future of the cryptocurrency market. Let us know in the comments below and don’t forget to share this article with your friends on social media!

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