Bitcoin (BTC) reached $ 20,000 in 2017 before quickly collapsing. The same overhead signal is now back in the circuit, according to Glassnode researchers. But in addition to the much stronger fundamentals this time around, the continuous spike appears to be completely different for other reasons.

Bitcoin usually leaves when whales make a profit, causing a ripple effect in the cryptocurrency market. Thus, when the vast majority of the market is profitable, the chances of a correction increase.

Bitcoin UTXO’s profit ratio. Source: Glassnode
98% of Bitcoin addresses are now profitable
After the crash in March 2020, when bitcoin’s price fell below $ 3,600 on BitMEX, BTC was up 260%. After this big rally, the consolidation or reversal phase could lead to a stronger rally over the medium term.

Glassnode researchers found that the last time 98% of all Bitcoin UTXOs were profitable was in December 2017. After Bitcoin peaked at $ 19,798 on December 16, 2017, it fell 45% in six days to $ 10,961.

Bitcoin weekly prices since 2017. Source: TradingView.com
At the time, many whales and individual investors were making profits and causing huge volatility. Glassnode said:

“98% of all UTXO #Bitcoins are currently profitable. The level has not been seen since December 2017 and generally in the former BTC beef markets.”
However, there are several major and technical differences between the continuous rise and the 2017 high.

First, Bitcoin’s current rally has been more stable than the equivalent rally in 2017, which came so suddenly that no clear support and resistance levels were established.

Bitcoin rose steadily this time, confirming key support levels of $ 10,500, $ 11,300, $ 12,000, and $ 12,500.

Second, aggregate institutional demand and spot demand are high compared to the size of derivatives.

After Square, MicroStrategy and Stone Ridge’s notable investments in Bitcoin, the size of enterprise-focused platforms has increased. LMAX Digital, CME and Bakkt specifically noted that trading activity has increased significantly since August.

OTC sales are also growing
When miners, whales, and wealthy people buy and sell bitcoins, they usually rely on over-the-counter markets.

The OTC market allows entry of large trades with minimal slippage, which could lead to sharp price fluctuations on exchanges.

The continued growth in the number of OTC agreements indicates that the appetite of major investors and organizations is likely to increase. Network data provider CryptoQuant said:

“To see how many OTC agreements are available, you can check the flow rate ratio. Its 30-day moving average has reached its lowest level in two years. Large portfolios go outside the positions. PayPal news may just be the start.”
The combination of high volume, a stable bullish trend, and an increase in OTC volumes make new flows into the bitcoin market more likely. If the trend continues, this could offset potential profit reversals in the cryptocurrency market.

Source: CoinTelegraph

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