2024 saw a strong performance for Bitcoin, rising more than 4% on the first day alone. However, the market has been moving sideways since hitting an all-time high in March.
According to data from Copper, Bitcoin is currently at its most voracious in history. While there has not yet been a serious drop to cool things down, the market remains very uncertain.
Bitcoin’s current decline is similar to the 2015-2017 cycle, but the supply and demand pattern has not changed significantly. In fact, the price of Bitcoin has been moving sideways for more than six months.
Cryptocurrency traders are feeling impatient right now. Despite Bitcoin’s gains of 40%, almost double that of the S&P 500, expectations for the next bull run have them worried, seeing Bitcoin remain neutral.
The Fear and Greed Index shows that the most "greedy" days have occurred in the past decade, highlighting the heaviness of the market. If there are no major changes, 2024 may continue to see similar trends as 2023.
A key event this year was the sell-off that brought Bitcoin down to around $60,000, marking one of its biggest swings since the beginning of 2022. Despite this, Bitcoin has shown the ability to recover quickly, thanks to the depth and liquidity of the market, especially during non-trading hours.
The biggest drop this year was -26%, in line with previous bull market corrections, but it still worries many investors.
An important factor in the Bitcoin landscape in 2024 is the close relationship between Bitcoin price and exchange reserves. Data from Copper shows an almost perfect correlation between Bitcoin price and the value of Bitcoin USD reserves. When reserves change, so does the price. The market reacts more to changes in reserves than to changes in actual demand, which makes the market very sensitive.
However, if you look at the amount of Bitcoin reserves, the story is different. From 2020 to 2024, reserves have remained within a stable range despite large price fluctuations. This indicates that there are no large inflows or outflows, that is, no strong enough sell-offs or hoarding to make a difference.
The current price volatility may stem from the balance between supply and demand. When demand is high, reserves usually run out, but this has not happened since the beginning of this year, keeping the market at least on the surface stable.
This year, institutional investors have poured money into the market, and Bitcoin ETFs have seen strong inflows. These ETFs have risen for six consecutive days in the past week. Institutional demand is still holding up, especially after the SEC allowed the New York Stock Exchange and the Chicago Board Options Exchange to list Bitcoin ETF options.
Bitcoin’s dominance is currently at its highest level in years, reaching 59% on October 17 – a level not seen since April 2021. The next important resistance level is 60%. If this level is reached, other Layer 1 cryptocurrencies could rebound strongly.
In addition, falling inflation in Japan has weakened the yen, and the U.S. stock market is close to its all-time high, which has increased the risk appetite in the market. Traders expect that this sentiment will be further strengthened as the U.S. election approaches. As the most important risk asset, Bitcoin has benefited from this and has hit a new high in the past three months.
This week, Bitcoin has risen more than 10%, surpassing $69,000. Despite this growth, some traders remain cautious. Trader Roman described the current situation as a "liquidity frenzy," warning that Bitcoin may need to adjust before it can continue to rise.
According to data from Coinglass, liquidity barriers are forming on both sides of the spot price, indicating that traders are holding Bitcoin in a limited range, waiting for the next major move.
【Disclaimer】The market is risky, so be cautious when investing. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Investing based on this is at your own risk.
