Bitcoin Holds Strong Above $104K, But Market May Be Cautious
Cryptocurrency Bitcoin hovers around $104,000, as realized price indicators suggest possible decline in returns amid persistent bullish market conditions.
In the crypto realm, Bitcoin has been cruising at approximately $104,000, despite a moderating profitability trend. Realized prices, which represent the average acquisition price of all circulating BTC, still show strength, although the momentum appears to be subsiding. Due to this, combined with a dip in trading volume, the market might be entering a consolidation phase.
Since April 2022, the Bitcoin realized price has risen to around $45,100, an indicator of network-wide profitability. The daily returns on realized price have ranged between 0.10% and 0.23%, equating to annualized returns of 36% to 85%. Meanwhile, these returns' 30-day simple moving average (SMA) currently stands at approximately 0.10%, or around 35% to 40% annualized.
Previous trends indicate that extended negative returns, as witnessed in mid-2022 and from late 2022 to early 2023, were followed by consolidation near the $20,000 range. Investor sentiment was quiet during these phases. However, a turnaround occurred in early 2024, as consistently positive returns propelled Bitcoin past $70,000 and towards $90,000.
Bitcoin Hanging Strong Despite Decreasing Volume
Currently, Bitcoin is priced at $104,081.73, marking a daily increase of 0.34%. The market capitalization has climbed to $2.06 trillion, while Bitcoin's fully diluted valuation (FDV) stands at $2.18 trillion. However, the 24-hour trading volume has taken a dip by 13.29%, lowering the volume to $50.26 billion. This drop in volume could signify investor wariness, especially after bypassing the psychological resistance near $105,000.
Intra-day trading shows Bitcoin crossing the $104,800 mark, followed by a minor correction at the opening of trading on May 14, 2022. Notably, the price dipped twice below $103,500 and swiftly bounced back, suggesting that the support from dip buyers remains intact and the short-term sentiment appears optimistic.
The total supply of Bitcoin currently stands at 19,860,000 BTC, with the hard cap of 21 million yet to be reached. The volume-to-market cap ratio of 2.44% indicates a moderate liquidity level across trading venues.
Cautious Market Signals and Potential Consolidation
Even though the Bitcoin spot price is near all-time highs, the cooling of realized returns and volume suggests a slowdown in momentum. Historically, disagreements between price and profitability measures have triggered consolidation periods or market corrections.
The 30-day SMA downward trend in realized price yield serves as a warning to market participants. While the overall trend remains bullish, the divergence between advancing spot prices and falling returns could indicate a revaluation period before macroeconomic numbers or profit-taking at resistance levels.
Although the declining trading volume could signal caution and potential for corrections, the market dynamics are intricate and influenced by various factors such as geopolitical tensions, economic stability, exchange performance, and institutional buying. Thus, while it's essential to remain watchful, the long-term bullish sentiment remains a possibility due to public corporations and ETPs' accumulation of Bitcoin.
- The decrease in trading volume for Bitcoin could signify investor wariness, potentially indicating a consolidation phase, given the market may be entering a slower momentum period.
- The volume-to-market cap ratio of 2.44% indicates a moderately liquid market for Bitcoin across various trading venues.
- With the market capitalization of Bitcoin at $2.06 trillion, and a fully diluted valuation of $2.18 trillion, the crypto market remains a significant player in the finance sector.
- As the market consolidates, it's crucial to consider various factors such as geopolitical tensions, economic stability, exchange performance, and institutional buying that influence the dynamics of the crypto market.
- The long-term bullish sentiment for Bitcoin remains a possibility due to the continued accumulation of Bitcoin by public corporations and Exchange Traded Products (ETPs).
