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Bitcoin's performance this year, with a 120% increase in value, has sparked discussions among analysts and investors about the potential emergence of a new bull market. However, despite the significant price rise, the classic Bitcoin bull market "Fear of Missing Out" (FOMO) has not yet materialized, suggesting that we might still be in the early stages of a market shift.
Bitcoin's On-Chain Dynamics and Profitability
Data from Look Into Bitcoin, a statistics platform, indicates that on-chain transactions are gradually starting to involve "younger" Bitcoins. Philip Swift, the creator of Look Into Bitcoin, emphasized this trend in a recent post on X (formerly Twitter).
He referred to the realized cap HODL waves metric, also known as RHODL waves, which analyzes Bitcoin's supply based on the age group and the price at which it last moved on-chain. This metric shows that during bull market phases, there's an increase in the movement of coins that are frequently traded.
Conversely, in bear markets, investors tend to hold onto their assets, either due to fear of selling at a loss or because they are currently in a negative position on their holdings. “Warmer color low timeframe waves are only just starting to increase as coins are transferred on-chain,” Swift noted, suggesting that the market is yet to experience widespread FOMO.
Profitability and Market Trends
Another perspective comes from Onchained, a contributor to the on-chain analytics platform CryptoQuant. Utilizing the net unrealized profit/loss (NUPL) indicator, which provides profitability ratios for different groups of stored coins, Onchained pointed out that most Bitcoin holders are currently in a profitable state, except for those who acquired their Bitcoins in the run-up to the 2021 all-time high of $67,000.
These holders are nearing a break-even point, with their NUPL approaching the profitability benchmark of 0. This situation could change if Bitcoin's rally continues beyond $39,000, potentially marking a key turning point for these investors.
As Bitcoin hovers near 18-month highs and beyond its bear market range, the increase in smaller wallets and the lack of significant speculative return to the network further suggest a nuanced shift in the market dynamics.
The current state of Bitcoin, as analyzed by these on-chain metrics, indicates a cautiously optimistic outlook, with potential profitability changes on the horizon.