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- Bitcoin conditions are “similar to the second half or later stages of a bull market,” Glassnode said.
- Analysts pointed to signs of long-term holders spending coins and to a reduction in big wallets.
- Talk of a bitcoin price plunge has grown; a crypto entrepreneur said there could be a 90% drop.
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Bitcoin may be entering the second half or later stages of a bull market, crypto analysts at Glassnode said on Monday, as nervousness grows in some quarters about a plunge in the price.
Glassnode’s weekly analysis found that there had been a pickup in “wealth transfers” from long-term bitcoin holders to newer speculators, which the company said was reminiscent of market peaks.
The report said bitcoin bull markets eventually reach a “euphoric top” that materializes as big holders increasingly spending their coins to realize profits.
Glassnode estimated that long-term bitcoin holders had reactivated about 9% of supply so far in 2021 by spending coins, though this was below the 17% reactivation before the market’s crash in 2017.
“These studies suggest conditions are similar to the second half or later stages of a bull market,” Glassnode said.
The bitcoin price was down 6% on Tuesday, to $54,294, well off a high of $62,000 earlier in March but still up by about 700% from a year ago.
Glassnode also said on Tuesday that the biggest players – wallets with 1,000 to 10,000 bitcoins – had cut their holdings by 307,000 bitcoins since December.
Timothy Peterson, an investment manager, tweeted that falls in big holdings “are often but not always associated with bear markets.”
On Monday, Bobby Lee, the founder of the crypto exchange BTCC, told CNBC that 2021 would be a bull market for bitcoin, of the sort that comes around every three or four years. He said the bitcoin price could go as high as $300,000 this year.
But Lee said that the “bubble” was likely to pop. “People should be aware that it could fall as much as 80% to 90% of its value from the all-time peak,” he said.
However, many bitcoin advocates have pointed to growing institutional interest as a reason bitcoin is unlikely to crash as it has in the past. Visa, Morgan Stanley, and JPMorgan are some of the latest big names to get involved.
