The past few months have been extremely wild for the Bitcoin price. It made up for all of its losses after slipping from $ 65,000 in April, falling below $ 30,000 in July, and hitting a new all-time high of $ 66,955 last night on October 20th.
Many draw comparisons between April’s market dynamics and now, and as BTC is getting into pricing it is worth looking at a few reasons why things may be a lot more optimistic right now than they were before.
Retail FOMO does not appear
First and foremost, one of the main catalysts of parabolic movements for Bitcoin price has always been the deluge of retailers who stormed in to buy BTC before G.
This situation is often referred to as the “Retail FOMO” and we saw it in 2017 and April of this year according to data from Google Trends:
Source: Google Trends
The graph above for the past 5 years shows that the search for the cryptocurrency hit an all-time high in December 2017, when Bitcoin hit a high of around USD 20,000. It also started rising in April of this year – when BTC hit a new all-time high near $ 65,000.
At this time, however, there are no real signs that retail investors are entering the market. This means that the market is approaching actual FOMO levels, which has led many to believe that many positive things are to come.
The market is not overly leveraged
One way to compare the April market average with today is to look at the SOPR (LTH) of long-term holders, which shows when they distributed coins.
The graph above shows that LTH was profitable in April with an average leverage of 8X, and now the average leverage is only that 3X – a significant drop.
Another way to measure this is by the total value of positions liquidated.
April total market capitalization lost around $ 360 billion in just a few hours, and Bitcoin price fell $ 9,000. This resulted in a historic liquidation event that saw both long and short positions worth over $ 10 billion removed from the market.
The same thing happened in September amid a new wave of Chinese FUD when BTC slumped from $ 52,000 to $ 42,000. The subsequent liquidations, however, were significantly less than in April.
In April, we were used to seeing billions in liquidations per day as both the bulls and bears used excessive leverage – something that can also be derived through funding.
On the day Bitcoin broke its all-time high and experienced massive volatility in the past 24 hours, only about $ 300 million was left in liquidation.
This also means that the likelihood of a large squeeze is significantly lower as fewer traders use leverage.
It’s true that Bitcoin fundamentals generally solidified over the course of 2021, but the April rally was fueled by an event that may not be as significant as many people think – Tesla’s stake kicks in a.
However, now that things are very different, institutional investors continue to flock to the industry. In addition, the first Bitcoin futures ETF was approved in the USA and traded on the NYSE under the ticker BITO.
It was one of the hottest products on Wall Street, generating over $ 1 billion in volume and over half a billion dollars in net worth on its first day of trading.
This has significantly legitimized the market and opened the door for more traditional investors as it offers a regulated product that they can take advantage of.
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According to Cryptopotato