29 July 2024
The CEO and founder of the on-chain analytics firm CryptoQuant has explained how this Bitcoin bull cycle could probably last till mid-2025.
Profit-Taking From Old Bitcoin Whales Lasted For 18 Months In Previous Cycles
In a new post on X, CryptoQuant founder and CEO Ki Young Ju has discussed about a pattern that old whales have followed in terms of profit-taking during the past cycles.
“Old whales take profits during bull markets,” notes Young Ju. “Their selling brings new capital into accumulation addresses, raising realized prices.” Accumulation Addresses refer to the Bitcoin wallets that have no history of selling.
These addresses also have a few other conditions, such as they must have at least two deposits and shouldn’t be connected to miners or centralized exchanges. They should also carry a balance of at least 10 BTC, and their last transaction should have been within the past seven years.
The Accumulation Addresses basically reflect the perennial HODLers of the market, who only buy more and never sell. During bull markets, as old whales break their silence to harvest their profits, demand from these HODLers absorbs the selling.
To display this trend, the CryptoQuant CEO has made use of the “Realized Price” metric, which keeps track of the cost basis of the average investor belonging to this cohort.
When the value of this indicator is above the spot price of the cryptocurrency, it means the cohort as a whole is in a state of unrealized loss right now. On the other hand, it being under BTC’s value implies these diamond hands are currently carrying profits.
Now, here is a chart that shows the trend in the Realized Price for the Bitcoin Accumulation Addresses over the past decade:
As shown in the above graph, the Realized Price for this cohort observed a rise during the last two Bitcoin bull runs. This would suggest that these HODLers were buying as prices were going up, thus raising their average cost basis.
This accumulation likely corresponded to profit-taking from other entities in the market. As Young Ju has pointed out, this profit-taking spree lasted for about 18 months in these past cycles.
From the chart, it’s visible that the indicator has once again started showing an uptrend with the price rally this year. This would suggest that the Accumulation Addresses are back to absorbing profit-taking from old whales.
So far, this rise has lasted for around four months, which means that there could still be around another fourteen months of it left, if the last two cycles are anything to go by. Based on this, the analyst thinks this latest Bitcoin bull cycle could end up running into mid-2025.
BTC Price
Bitcoin has edged close to the $70,000 level during the past day after observing a surge of around 3%.