The cryptocurrency market, which is known for its volatility, is currently witnessing Bitcoin’s ascent towards a critical juncture: the $45,000 mark.
This threshold, far from being a mere technical milestone, holds a deeper significance for a considerable portion of Bitcoin investors. This importance stems from the fact that this level corresponds to the average cost basis for those who invested in Bitcoin between two and three years ago, according to insights from CryptoQuant.
These investors, who represent about 16% of the total Bitcoin supply and account for 33% of its realized capitalization, are now at a pivotal point, as the price approaches their initial investment value.
Surge to a yearly high
Recently, Bitcoin’s price hit a new year-to-date peak, reaching $41,911 on the Bitstamp exchange. This upward movement marks the first time in the current year that Bitcoin has crossed the $40,000 barrier. Analysts attribute this surge to a combination of factors, including heightened expectations for the approval of a Bitcoin exchange-traded fund and speculation about potential cuts in U.S. interest rates.
Meanwhile, open interest in Bitcoin perpetual futures on the Deribit exchange reached a yearly high of $740 million. This level of interest has not been seen since November 2021 when Bitcoin attained its all-time high of over $68,000.
Cautiously optimistic
Despite the recent price rally, the Bitcoin market has not yet entered a state of extreme greed. The “Fear and Greed Index,” a tool used to gauge investor sentiment in the cryptocurrency market, currently rates Bitcoin’s market sentiment as “Greed” with a score of 75. This index, which ranges from 0 (extreme fear) to 100 (extreme greed), provides an overview of investor emotions and behavior. While a score of 75 indicates a strong bullish sentiment, it is notably lower than the ‘extreme greed’ readings often associated with market tops.
