Bitcoin is currently causing “new investors” mental distress, as we saw before the all-time high in 2020. In a new analysis for CryptoQuant, Avocado_onchain writes about the interesting similarities he’s currently seeing between new investors in 2019 and 2024.
Can we still prepare for a second part of the bull run?
Bitcoin all-time high buyers in trouble
Investors who bought their Bitcoin over the past six months are either holding on to their coins with caution or selling at a loss after the price saw mostly negative price action.
According to Avocado_onchain, we are currently seeing a spike in the number of Bitcoin held on the same address for six months or less. The exact same thing happened in 2019 (see chart above).
Many people bought their Bitcoin around the all-time high of March 2024 and are selling it at a loss; or they are holding on and are therefore moving into the group that holds their Bitcoin for 6-12 months.
After peaking in 2019, it took Bitcoin about 500 days to surpass its December 2017 all-time high of $20,000 in 2020. We should also keep in mind that we were dealing with the COVID-19 pandemic at the time, which likely delayed the 2020/2021 bull market somewhat.
New investors ‘crucial’ for Bitcoin price
New investors are often people who are coming into contact with Bitcoin for the first time or are deciding to invest significantly for the first time. They often do this at a time when the price is on the rise. For example, during the early months of 2024.
Often the average purchase price of these “speculators”, as analysts usually label them, forms an important support/resistance for the Bitcoin price. Why? Because these investors are often inclined to sell after a nosedive below their purchase price when Bitcoin returns to that purchase price.
They then break even and are happy to exit the market without making a loss.
“While I have no doubts about the long-term uptrend, I believe that in the short term it is good to temper expectations and keep a close eye on the market. Historically, the influx of capital from new investors is crucial for new increases in the Bitcoin price,” said Avocado_onchain.
In this respect, the conclusion seems to be mainly that we need to be patient and that there is currently little to say about the price direction of Bitcoin.
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Source: https://newsbit.nl/huidige-cyclus-bitcoin-lijkt-op-koerspiek-van-2019/
