Being greedy in any investment, including Bitcoin, is not a sound strategy as it can lead to impulsive decisions based on emotions rather than logic. Greed can also cause investors to overlook potential risks and to hold onto investments for too long, even when market conditions are unfavorable. Additionally, greed can lead to over-investment, which can result in financial losses. It’s important to have a balanced and well-thought-out investment approach, considering both the potential rewards and risks, rather than being driven solely by greed.

A Momentum-Driven Shift, A New Regime For Bitcoin
A New Regime

The cryptocurrency market has experienced a significant trend change, and the market sentiment has also shifted in 2023. Since breaking from consolidation, It’s momentum has shifted to the upside, transitioning from a bear market to the early stages of a new bull market.

A Momentum-Driven Shift, A New Regime for Bitcoin

As prices become more attractive, the market becomes saturated with long-term holders who do not intend to sell until prices are significantly higher. These holders recognize the value of the cryptocurrency and are “price insensitive.” As a result, exchange/broker order books become more illiquid as there are fewer marginal sellers. In the chart, Bitcoin is becoming increasingly illiquid, with an exponential increase in long-term holders who now represent 49% of the network, a new all-time high.

Once demand hits an illiquid order book, deeply undervalued assets tend to rocket up in a short-squeezed fashion. This is because there are very few active sellers in the market, causing buyers to have no sellers to buy from. As a result, bullish momentum builds as the closest available sellers place orders.

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The Market Leverage Ratio, a Capriole Investment measure of aggregate leverage and positioning in the market , suggests an almost identical pattern occurred in January 2023 as in mid-2021 when Bitcoin entered a price discovery phase. This phase is considered a significant turning point, the “beginning of a new regime,” and is expected to have a positive impact on 2023 with more significant returns coming in 2024.

Bitcoin Bear Market Bottom Confirmed?

Its’s Percent Addresses in Profit metric has bounced from a typical bear market low of 50% to 70%. This usually marks a regime change and sees some profit taking. They have identified several factors for it’s recent breakout and further upside price action in the coming months, including optimal halving cycle timing, the Bitcoin cycle drawdown hitting typical -80% levels, and a likely Fed rate pause and change of policy in 2023.

All of the above suggests that the market is at the early stages of a new Bitcoin bull market regime. Despite the recent Fed rate hike, it is currently trading at $23,450 and is up 1.8% in the last seven days. Bitcoin’s price action suggests a pullback to the support line for a further counterattack to regain the $24,500 level.

In conclusion, the shift in Bitcoin’s momentum and the saturation of long-term holders in the market suggest that the cryptocurrency is entering a new bull market regime. Investors should keep an eye on the key factors above for further price action in the coming months.

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