Bitcoin cycle

YEREVAN ( — The conversion of Grayscale’s Bitcoin Trust (GBTC) to a spot ETF and the subsequent outflows have triggered shifts in investor behavior and Bitcoin market dynamics. Investors are increasingly looking for more cost-effective ways to gain exposure to Bitcoin, moving funds from GBTC to lower-cost Bitcoin ETF options.

Let’s dive into further implications for the leading digital asset.

#1 Bitcoin Cycle Positioning

2024 is a crucial period for Bitcoin. The digital asset will undergo its fourth halving. In detail, a Bitcoin halving is when the payout for mining a new block is halved. It happens after every 210,000 blocks (approximately four years). 

The first halving occurred in March 2012, July 2016, and May 2020. Based on current estimates, the next Bitcoin halving will occur on April 26, 2024, at 18:30 UTC on block 840,000. It will reduce the block reward to 3.125 BTC. Notably, each of the three previous halvings brought on a bullish wave, albeit not immediately, taking up to 33 months.

Moreover, the halving is crucial in determining the Bitcoin market cycle, the repeating pattern observed in the BTC price. According to the research platform Glassnode, the digital asset is in a favorable position compared to the previous three cycles.

Bitcoin cycle ahead of the halving.
Bitcoin cycle ahead of the halving. Source: Glassnode

The notion of history rhyming rings strikingly true, with the last 3 cycles experiencing eerily similar performance. Our current cycle remains marginally ahead of both the 2016-17 and 2019-20 periods, due in part to an extremely strong year in 2023.

read the latest Glassnode report.

#2 Overall Market Dynamics

By analyzing the Realized Cap metric, we can gauge the intensity of capital withdrawals throughout various cycles and the time taken for recovery. In detail, the Realized Cap is a metric that calculates the total value of the coin supply based on the price at which each coin last moved.

Unlike market capitalization, which multiplies the current price by the total supply, Realized Cap provides a more nuanced view by aggregating the value of each coin at its last transaction price.

According to Glassnode, the Realized Cap is only 5.4% below its all-time high (ATH) of $467 billion, showing significant capital inflows. However, this cycle’s recovery speed is noticeably slower than previous ones, likely due to the substantial supply backlog from complex trades, such as the GBTC arbitrage. This cycle records the slowest recovery pace for the Realized Cap ever observed.

Bitcoin Realized Cap Drawdown
Bitcoin Realized Cap Drawdown. Source: Glassnode

For the asset price, a low Realized Cap may imply that there is room for growth as it suggests that the market valuation could increase if confidence and demand for the asset rise, leading to higher transaction prices in the future.

The research platform also commented that this phenomenon can partly be attributed to the significant redemptions from the Grayscale GBTC product. As a closed-end trust fund, GBTC amassed over 660,000 BTC in early 2021 as traders sought to close the Net Asset Value (NAV) premium arbitrage.

#3 Investor Behavior Stable

Macroeconomic headwinds and large shifts in the political climate can deter investors and shift their behavior. Meanwhile, on-chain metrics suggest that Bitcoin holders, also known as HODLers, stick to their guns.

Despite market fluctuations, including strong rallies and sell-the-news events, most Bitcoin HODLers remain unaffected, holding onto their investments through various market conditions. The “Supply Last Active” metric, which tracks the portion of circulating supply held for extended periods, shows a minor decrease in the 1-year and 2-year categories, partly linked to GBTC activities.

This suggests some older supplies hit the market recently. Nevertheless, a significant portion of Bitcoin holders continues to hold, with the amount of supply held for various durations remaining close to all-time highs.

Bitcoin active entities
Bitcoin active entities. Source: Glassnode

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