Bitcoin has seen a notable increase in demand since July, positioning itself for what might be another significant price rally potentially reaching over $200,000 by year-end. Recent analysis from CryptoQuant indicates that the demand has surged at an impressive rate of approximately 62,000 BTC per month. This growth echoes trends observed in previous years, particularly in the fourth quarters of 2020 and 2021, which were characterized by sharp price escalations.
A considerable portion of this growth is attributed to large holders, often referred to as “whales,” and Exchange-Traded Funds (ETFs). The balances held by these large investors are increasing at an annualized rate of 331,000 BTC, surpassing the 255,000 BTC noted during Q4 2024 and the 238,000 BTC from the beginning of Q4 2020. This stands in stark contrast to a contraction of 197,000 BTC that was indicative of a weaker market in 2021.
ETFs are further amplifying the demand, reflecting a striking 71% increase in their holdings, with purchases amounting to 213,000 BTC in Q4 2024. The potential for continued growth in ETF allocations may serve to further fuel this upward momentum as the year progresses.
However, for this growing appetite to translate into a breakout in Bitcoin’s price, momentum on the pricing side remains crucial. The on-chain valuation highlights a critical threshold at the Trader’s Realized Price of $116,000. A decisive upward movement beyond this mark could signal a return to a “bull” phase in the market cycle, potentially unlocking a pricing range between $160,000 and $200,000 for Q4.
This Bull-Bear Market Cycle Indicator relies on a comparison between Bitcoin’s current market price and various realized price metrics, which account for the average cost basis of different investor groups. When prices rise above established levels, the model indicates a transition into bullish territory, suggesting increasing momentum and profits for existing holders. Conversely, dips below those thresholds indicate bearish conditions, leading to potential stress and unrealized losses among investors.
As October approaches, the market conditions appear strikingly similar to those observed in the previous year. CryptoQuant’s Bull Score Index has maintained a range between 40 and 50 in recent days, historically signaling the onset of bullish trends. In 2024, the index crossed the 50-mark at the start of Q4, coinciding with a rapid price surge from around $70,000 to $100,000.
With demand metrics strengthening, traders are closely monitoring the unfolding situation, hopeful for a recurrence of this pattern in the upcoming months.
