The Week Onchain》Week 47: BTC Market Cap surpasses silver! What's behind the ATH?

Editor's Note:

This report is translated from glassnode's "Riding the Liquidity Tide". BTC has broken through historical highs and is about to reach the long-awaited $100,000, and the underlying driver is not only the surge in market demand, but also the combined effect of ETF fund inflows and strong momentum in the spot market. This article focuses on the recent price dynamics of BTC, delving into the key role of ETF in absorbing selling pressure from long-term holders, as well as how stablecoin funds help boost market sentiment. In addition, through on-chain data analysis, this article reveals the profitability of investors and the spending behavior of long-term holders, showing the potential and risks for further market upside.

As the market enters a frenzy phase, the unrealized profits of long-term holders reach a high level, and the selling pressure gradually exceeds the inflow capacity of ETFs. The market is facing new balance challenges. For investors who follow the digital asset market, this article provides comprehensive insights from fund flows to investor behavior, helping you find opportunities and risk warnings in the next round of market fluctuations.

Key Summary

BTCrise to 99,000, driven by strong capital inflows from ETF and spot markets. In the past 30 days, the market has absorbed over 629 billion in funds, with BTC dominating the demand influx.

The high unrealized profits of long-term holders have prompted a large number of sell-offs. From October 8th to November 13th, a total of 128,000 BTC were sold.

The US Spot ETF plays a key role and absorbs about 90% of the selling pressure from long-term holders during this period, highlighting the importance of ETFs in maintaining market liquidity and stability.

💡 To view all the charts in this report, please visit 'The Week On-chain' dashboard.

Surge in capital inflows

Since early November, the price of BTC has performed very well, setting multiple new historical highs throughout the month. Comparing the price performance of the current cycle with the 2015 to 2018 🔵 and 2018 to 2022 🟢 cycles, significant similarities can be observed. Whether in terms of price increase or duration, the performance is remarkably consistent, despite vastly different market conditions.

The consistency during this period is fascinating and provides insights into understanding the overall economic price behavior of BTC and the cyclical market structure.

In history, the Bull Market usually lasts for 4 to 11 months, providing a historical framework for evaluating the duration and momentum of the cycle.

Image source: glassnode real-time chart-BTC: price performance since the cycle low

This week, BTC reached a new all-time high of 99,299, with a staggering quarterly performance of +61.3%. In comparison, gold and silver only saw quarterly gains of +5.3% and +8.0% respectively.

This clear gap shows that capital may be shifting from traditional commodity value storage assets to young, digital BTC.

Bitcoin's market capitalization has also expanded to a staggering 17.96 trillion US dollars, making it the seventh largest asset globally, surpassing the value of 17.63 trillion US dollars of silver and 17.91 trillion US dollars of Saudi Aramco.

Currently, BTC is only about 20% behind Amazon, which is seen as the next important milestone.

Image source: glassnode Real-time Chart-BTC: BTC Performance vs. Commodity Prices for 90 Days

After BTC's impressive performance in the past 90 days, the broader digital asset market has started to attract a large amount of capital. In the past 30 days, the total inflow of funds reached 62.9 billion, with BTC and the Ethereum network absorbing 53.3 billion, while the supply of stablecoins grew by 9.6 billion.

The inflow of these funds symbolizes the highest level since the high point in March 2024, reflecting the confidence rebuilding and emerging new demands after the U.S. presidential election.

Source: glassnode Real-time Chart - Market: Overall market realized value net position changes

Further analysis of the fund inflows reveals that the vast majority of the 9.7 billion Stable Coins minted in the past 30 days have flowed directly into Centralized Exchanges. This influx closely aligns with the total fund flow of Stable Coin assets during the same period, emphasizing the crucial role of Stable Coins in facilitating market activities.

The sharp increase in the stablecoin balance of the exchange reflects strong speculative demand, and investors are trying to seize the trend, further strengthening the optimistic sentiment and post-election momentum.

Image source: glassnode real-time chart - Stable Coin: exchange net position changes

Investor profitability investigation

We have discussed how the rise of market liquidity supports the outstanding performance of BTC. Next, we will evaluate how this price behavior affects the unrealized profits (book gains) of market investors and analyze it using the MVRV ratio.

Comparing the current MVRV ratio 🟠 with its annual moving average 🔵, we can see an accelerated improvement in investor profitability. This phenomenon typically provides support for sustained market momentum but also creates conditions in which investors are more likely to start realizing profits to realize these paper gains.

Image source: glassnode real-time chart - BTC: MVRV momentum

As the market investment profitability improves, potential new selling pressure also increases. By overlapping the MVRV ratio with the ±1 standard deviation band, we can construct a framework to assess market overheating and cooling conditions.

Overheated (Warm Color): MVRV exceeds +1 standard deviation

Cooling (cool colors): MVRV below -1 standard deviation

The price of Bitcoin recently broke through the +1σ band at 89,500, indicating that investors currently hold statistically significant unrealized profits, suggesting an increased likelihood of profit-taking activities.

Nevertheless, historically, markets in such overheated conditions usually sustain for a longer period, especially when there is sufficient inflow of funds to absorb selling pressure.

Source: glassnode real-time chart - BTC: MVRV extreme deviation pricing band

Extreme spending of long-term holder

During the frenzy stage of the market cycle, the behavior of long-term investors becomes crucial. Long-term holders control a large amount of supply, and their spending dynamics can have a significant impact on market stability, ultimately forming local or global highs.

We can use the NUPL indicator to evaluate the book income of long-term holders. Currently, the indicator is 0.72, slightly below the threshold of confidence 🟢 and enthusiasm 🔵, which is 0.75. Despite the significant price increase, the sentiment of these investors is still cautious compared to previous cycle highs, indicating that there may still be room for further growth.

Source: glassnode real-time chart-BTC: Long-term holder NUPL with physical adjustment

As BTC breaks through 75,600, all 14 million BTC held by long-term holders have entered a profitable state, attracting accelerated spending. Since surpassing the historical high, the balance has decreased by more than 200,000 BTC.

This is a classic and repetitive pattern, that is, whenever the price action is strong and the demand is sufficient to absorb, long-term holders begin to take profit. As there is still a large amount of BTC controlled by long-term holders, many holders may be waiting for higher prices before releasing more coins into circulation.

Image source: glassnode real-time chart-BTC: Long-term holder profit supply analysis

We can use the long-term holder expenditure ratio to assess the strength of selling pressure from long-term holders. This tool evaluates the percentage of days in the past two weeks where the group's expenditure exceeds its cumulative amount, resulting in a net decrease in its holdings.

Since early September, as the price of BTC has been growing, the expenses of long-term holders have been steadily increasing. Recently, it rose to 99,000, indicating that in the past 15 days, there have been 11 days of decreasing long-term holder balances.

This highlights the increasing pressure on long-term holders, but it has not reached the scale observed near the highs in March 2021 and March 2024.

Source: glassnode Real-time Chart-BTC: Long-term holder spending binary indicator (15 days) [signal]

By identifying the spending behavior of long-term holders, we can use the next tool to gain a deeper understanding of their activities at key market points. The interaction between profit realization and unrealized profits helps highlight their role in shaping cycle transitions.

This chart visualizes:

Realized price of long-term holder (🔵): Average purchase price of long-term holder.

Profit/Loss Pricing Bands (🔵): Bands indicating extreme profit levels (+150%, +350%) and loss levels (-25%), which typically trigger significant spending activities.

Profit-taking(🟩): A phase of realizing profits by long-term holders with over +350% returns and increasing expenses.

Capitulation（🟥）: A period of high expenditure when long-term holders are in a state of loss of more than -25%.

The price of BTC has surpassed +350% profit-taking (located at 87,000), prompting significant profit-taking behavior among the group. With the market rebounding, distribution pressure may increase, and unrealized gains will correspondingly expand. However, historically, this often signifies the beginning of the most extreme stage of the previous Bull Market, with unrealized profits expanding to over 800% in the 2021 cycle.

Image source: glassnode real-time chart - BTC: Long-term holder behavior analysis

Institutional buyers

Now we turn our attention to the impact of institutional buyers on the market, especially through the US Spot ETF. In recent weeks, ETFs have become the main source of demand, absorbing most of the selling pressure from long-term holders. This dynamic also highlights the increasing importance of institutional demand in shaping the structure of the modern Bitcoin market.

According to 'Week 46: Election Effect, BTC Enters Frenzy!', since mid-October, the weekly inflow of funds into ETFs has surged to between 1 billion and 2 billion. This represents a significant rise in institutional demand and is one of the most significant periods of inflow to date.

Source: glassnode real-time chart-BTC: Spot ETF fund inflow [BTC]

In order to visualize the opposing forces of long-term holder selling pressure and ETF demand, we can analyze the 30-day changes in BTC balances of various groups.

The chart below shows that between October 8 and November 13, ETFs absorbed approximately 128,000 BTC, accounting for 93% of the net selling pressure of approximately 137,000 BTC from long-term holders.

This highlights the important role of ETF in stabilizing the market during periods of high selling pressure. However, since November 13th, the selling pressure from long-term holders has begun to exceed the net inflow of ETFs, which is similar to the pattern observed in late February 2024, when supply and demand imbalances led to increased market volatility and consolidation.

Image source: glassnode Real-time Chart-BTC: Long-term holder and US Spot ETF balance change analysis

Summary and Conclusion

BTCrise to 99,000, supported by strong fund inflows, about 62.9 billion funds have flowed into the digital asset industry in the past 30 days. This demand is led by institutional investors of the US Spot ETF, and may even be capital transferred from gold and silver.

ETF plays a key role, absorbing over 90% of the selling pressure from long-term holders. However, as unrealized profits reach more extreme levels, we can expect more spending behavior from long-term holders, exceeding the inflow level of ETF in the short term.

glassnode related links Telegram

Glassnode Studio

Glassnode Alerts Twitter

Disclaimer: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice. Users should consider whether any opinions, points of view, or conclusions of this article are suitable for their specific situation. It is the user's own responsibility to invest based on this.

The Week Onchain》Week 47: BTC Market Cap surpasses silver! What's behind ATH? 』This article was originally published in『encryption city』