ETF Progress and Overall Environmental Overview
With multiple Bitcoin ETFs coming to market, the Federal Reserve's monetary policy shifting to loosen, and US political trends continuing to support cryptocurrency, Bitcoin is set for a strong resurgence in 2024, becoming one of the best-performing assets of the year. Compared to the S&P 500 (+26%), NASDAQ (+33%), and gold (+28%), Bitcoin's (+126%) increase this year stands out.
As we enter 2025, the market begins to focus on 'how far this bull market can go,' with favorable conditions in the overall environment: ETF scales skyrocketing, Bitcoin prices having previously reached the 100,000 milestone, and Donald Trump being re-elected as president, leading digital asset policies in a positive direction. Wall Street's hot money influx makes Bitcoin an important choice for asset allocation. However, before enjoying the market, Forbes emphasizes that '5 key indicators' will become tools for investors to judge trends.
5 Major Indicators Breakdown: Analyzing Short and Long-term Trends from Market Data
1. Exchange Balances / Net Flows
Forbes reports that approximately 2.5 million Bitcoins are currently held on major centralized exchanges, accounting for about 12.6% of the total circulating supply, which is a significant decrease from 3 million at the beginning of the year. A decrease in balances indicates that more holders are transferring Bitcoin to personal wallets, showing an increased willingness to hold long-term and relatively reduced selling pressure. If the bull market approaches its peak later, we might see exchange balances increase again as investors return coins to exchanges to prepare for cashing out at highs. Observing the trend of this indicator can help determine selling pressure and market sentiment.
2. MVRV Z-Score
MVRV Z-Score is commonly used to identify whether Bitcoin is overvalued or undervalued. It compares the gap between market value and realized value; a higher value indicates that the price may be overheated. Historical experience shows that a Z-Score above 6 to 7 often signals that the market is nearing its peak. Currently, this score is still below 3, indicating that it has not yet reached a frenzy point, and the market still has room to continue rising. However, if the Z-Score starts to rise sharply, investors should pay extra attention to potential high-risk positions.
3. 1+ Year HODL Wave
This indicator assesses the proportion of holders who have held coins for at least one year to judge the movements of long-term holders versus short-term speculators. The report notes that as the bull market approaches its end, the HODL rate of over a year will significantly decrease, indicating that seasoned players are selling their Bitcoin to new retail investors, forming what is known as 'newbie taking the bait.' Although there has been a slight sell-off by long-term holders, this volatility is still less than previous historical peaks, showing that a large-scale turnover stage has not yet been reached.
4. Terminal Price
The terminal price indicator is a complex on-chain indicator used to estimate potential price peaks in the Bitcoin market cycle. It is based on the concept of 'Transferred Price,' calculating the terminal price by multiplying 'Transferred Price' by 21 (the total amount of Bitcoin at 21 million), resulting in a historically accurate indicator that often appears at the peak of a bull market.
Currently, the terminal price is about 188,000, and it will continue to adjust daily as Bitcoin value rises. If this cycle can replicate past trends, the price peak may break the 200,000 level. However, like any estimate, there is uncertainty; the terminal price should only serve as a reference and not the sole basis for judgment.
5. Google Search Trends
Although it is off-chain data, Google searches remain a key indicator of retail sentiment. In the past, when Bitcoin prices reached new highs, Google search volume surged significantly. The report mentions that although Bitcoin has previously surged to 100,000 USD, the Google search interest only reached about 38% of the peak in 2021. This indicates that mainstream retail investors have not yet 'rushed in' as they have before, suggesting that the market might still be in the mid-stage, waiting for further momentum to build before approaching the peak.
Looking ahead to 2025: cautiously optimistic, do not blindly chase highs.
Despite Bitcoin's impressive performance this year, Forbes also warns that changes could occur from ETF progress to the overall economy:
First, if the Federal Reserve's policy direction reverses or geopolitical black swans reappear, the Bitcoin bull market may slow down or even turn around.
Secondly, the Trump administration is becoming more friendly towards digital assets, but legislative and regulatory details are still to be observed.
Moreover, even if the bull market continues, market volatility will remain high, and novice investors should remember to set profit-taking and risk management measures.
Overall, Forbes suggests that investors pay attention to the aforementioned 5 key indicators, which can help them gain a deeper understanding and timely observe changes, aiding rational responses to potential upcoming market trends. After all, while Bitcoin enjoys the title of 'digital gold,' it also inherently carries high risks. Whether one can seize opportunities and look forward to the next wave of growth depends on the investor's grasp of market dynamics. Here’s hoping everyone can earn abundantly in the new year.
'Is the Bitcoin bull market still on in 2025? Understanding these 5 key indicators will let you know when to get off!' This article was first published in 'Crypto City.'
