Bitcoin’s Remarkable 2024 Performance
Bitcoin has demonstrated extraordinary growth in 2024, gaining over 150% year-to-date. For weeks, it even traded above $100,000. When comparing this cycle’s performance with previous ones, striking similarities emerge:
- 2015-2018 Cycle: +501%
- 2018-2022 Cycle: +1,085%
- 2022+ Cycle (Current): +638%
Despite the market’s growing size and maturity, which demands higher capital inflows, these growth levels are noteworthy.
Market Drawdowns Show Resilience
Drawdowns during this bull cycle have been smaller than in past cycles. The sharpest decline was 32% on August 5, 2024. Most corrections have seen a drop of just 25%, making this cycle one of the least volatile.
Increased institutional interest and the introduction of spot ETFs have likely contributed to the market’s stability.
Impact of Short-Term Holders
Periods of distress, such as August 2023 and September 2024, revealed significant unrealized losses among Short-Term Holders (STHs). Despite the majority of STH-held coins being underwater, losses were less severe compared to previous downturns.
This reduced impact highlights the market’s resilience and the ability of newer investors to weather corrections without panic selling.
Long-Term Holders Drive Sell-Side Pressure
Long-Term Holders (LTHs) have sold significant amounts of Bitcoin during the rally past $100,000. In November 2024, profit-taking by LTHs reached a record $2.1 billion per day.
Despite these large sales, demand from new investors matched the selling pressure, injecting fresh capital and stabilizing the market.
Wealth Shifts to New Investors
Recently, more wealth has shifted to coins held by new investors, reflecting increased demand. However, the proportion of wealth among these investors remains below previous cycle highs. This indicates that market euphoria has not yet reached its peak, suggesting potential for further growth.
Age-Based Sell-Side Contributions
Most selling pressure came from coins held for 6-12 months, which accounted for nearly 39% of profits taken in 2024. Conversely, coins held for over three years remained largely untouched, signaling higher price thresholds before these holders are likely to sell.
Market Outlook with AVIV Ratio
The AVIV Ratio, which tracks unrealized profits among investors, suggests the market still has room to grow. Historically, bull markets end when all investor groups are sitting on substantial profits, creating overwhelming sell pressure.
Currently, the AVIV Ratio has not hit its upper limit, indicating potential for further upward momentum.
Conclusion: Balanced Forces in Play
Bitcoin’s 2024 market demonstrates a remarkable balance between sell-side pressure from Long-Term Holders and robust demand from new investors. While the market matures, wealth is shifting toward newer participants, a hallmark of late bull cycles.
This cycle’s reduced volatility, coupled with strong demand, suggests Bitcoin’s bull run may not yet have reached its zenith. The ongoing interplay between supply and demand will determine the market’s trajectory in the months ahead.
