Bitcoin Enters Euphoric Phase, Mirroring Bullish Trajectory from Previous Cycle

Bitcoin has been in a prolonged "euphoria wave" for the past two months, a pattern similar to the final stages of the previous bull market. The "Supply Profitability State" indicator, which tracks the percentage of the circulating supply that is currently in profit, has entered the "euphoria" phase, above the +1 standard deviation threshold. This prolonged euphoric phase, if it follows a similar trajectory to the last bull run, could suggest that the current Bitcoin rally still has several months of its expansionary cycle ahead.

Bitcoin Enters Euphoric Phase, Echoes Bullish Pattern from Previous Cycle

On-chain data reveals that Bitcoin has embarked on a two-month "euphoria wave," mirroring a significant phase witnessed during the last bull run. This analysis, provided by the renowned on-chain analytics firm Glassnode, sheds light on the current market's dynamics and potential trajectory.

Supply Profitability State: A Key Indicator

The "Supply Profitability State" indicator, based on the "Percent Supply in Profit," monitors the percentage of the total circulating Bitcoin supply that is currently yielding a profit. By examining the on-chain history of each coin in circulation, the indicator approximates the price at which it was last transacted. If this price is lower than the current spot price, the coin holds a net unrealized gain.

When a significant proportion of the supply is in profit, it signals the market's euphoric sentiment. Glassnode identifies three important lines for the Bitcoin Percent Supply in Profit: the cumulative mean (blue line), and the +1 (green) and -1 (red) standard deviation (SD) from this mean.

Euphoria Wave and Bull Run Correlation

During the last bull run, Bitcoin experienced a 1.5-month pre-euphoria wave, which subsequently transitioned into a period of decline and consolidation. This was followed by a sharp rally that broke past the +1SD barrier, leading to new all-time highs.

The current bull cycle exhibits a similar pattern. A two-month pre-euphoria phase was followed by a drawdown, which has now been succeeded by another two-month euphoria wave. This wave has pushed Bitcoin to new record highs.

Potential Duration of Euphoria Wave

If the current euphoria wave persists for a similar period as in the last bull run, approximately four or more months of the Bitcoin bull rally could remain. This conclusion stems from the analysis of historical data that suggests a correlation between the length of the euphoria wave and the overall duration of the bull market.

BTC Price Dynamics

Bitcoin's price has recently retraced slightly from its peak above $72,000, hovering around the $69,400 level. Despite this pullback, the asset remains well within the bullish momentum that has characterized the last few months.

Conclusion

The on-chain analysis of Bitcoin's Supply Profitability State provides valuable insights into the market's sentiment and potential trajectory. The current euphoria wave, echoing the pattern observed during the last bull run, suggests that the bullish momentum may continue for an extended period. However, as with any investment, it is crucial to conduct thorough research and exercise due diligence before making any decisions.