2024 saw a strong start for Bitcoin, with a gain of more than 4% on the first day alone. However, the market has been in a sideways state since hitting an all-time high in March.
The Fear and Greed Index shows Bitcoin is at its greediest point in history, according to data from Copper. While there hasnât been a major price drop to cool things down, the market remains highly volatile.
The current Bitcoin decline is similar to the 2015-2017 cycle, but the supply-demand balance has not changed significantly. In fact, the Bitcoin price has been moving sideways for over six months.
Cryptocurrency traders are feeling impatient right now. While Bitcoin has gained more than 40%, nearly double that of the S&P 500, the wait for the next bull run has many nervous as Bitcoin remains neutral.
The Fear and Greed Index has seen the most âgreedâ days in a decade, highlighting the heaviness of the market. 2024 is likely to follow a similar pattern to 2023 if no major changes occur.
One of the standout events this year was the sell-off that sent Bitcoin down to around $60,000, marking one of the biggest swings since the start of 2022.
Still, Bitcoin has shown resilience thanks to the depth and liquidity of the market, especially during after-hours trading sessions.
The maximum drop this year was recorded at -26%, in line with corrections in previous bull markets, but this still worries many investors.
Reserve data and market situation
A key element of Bitcoinâs 2024 picture is the tight correlation between Bitcoinâs price and the value of reserves on exchanges. Data from Copper shows a near-perfect correlation between Bitcoinâs price and the USD value of Bitcoin reserves. As reserves change, so does the price.
The market reacts more to changes in inventories than to changes in actual demand. It reacts rather than is driven by long-term demand, making the market very sensitive.
However, if we look at the number of Bitcoin reserves, the situation is different. From 2020 to 2024, the reserves have remained stable, despite the large price fluctuations. This suggests that there has been no significant inflow or outflow, meaning there has been no strong enough selling or hoarding to make a difference.
The current price volatility can be explained by the balance between supply and demand. When demand is high, reserves usually run out, but since the beginning of the year, this has not happened, keeping the market stable at least on the surface.
Impact from ETFs and external factors
Institutional investors have been pouring money into the market this year, with Bitcoin ETFs seeing strong inflows. These ETFs ended the week with a six-day winning streak. Institutional demand has remained strong, especially after the SEC allowed the NYSE and Cboe to list Bitcoin ETF options.
Bitcoin dominance is now at a multi-year high, reaching 59% on October 17 â a level not seen since April 2021. The next key resistance is at 60%. If this mark is reached, other Layer 1 coins could rally strongly.
In addition, falling inflation in Japan, which has weakened the Japanese yen, combined with the growth of US stocks near all-time highs, has created a risk-on sentiment in the market. Traders expect this sentiment to increase as the US election approaches. Bitcoin, as the leading risk asset, has benefited, hitting a new three-month high.
Bitcoin surged more than 10% this week, surpassing $69,000. Despite the gains, some traders remain cautious. Trader Roman described the current situation as âliquidity mania,â warning that Bitcoin may need a correction before continuing its rally.
According to data from Coinglass, liquidity walls are forming on both sides of the spot price, suggesting traders are holding Bitcoin in a tight range, waiting for the next big move.