Bitcoin (BTC), the leading cryptocurrency, has consistently demonstrated robust performance during the fourth quarters of its previous bull cycles, particularly in halving years. Historical data reveals that in significant upswings, such as those in 2012, 2016, and 2020, Bitcoin saw substantial gains of 9%, 59%, and a remarkable 171%, respectively, in the final quarter of each year. As we approach Q4 of this halving year, recent on-chain data suggests Bitcoin is mirroring these historical patterns, potentially setting the stage for another significant rally.
Recent insights from the analytics platform CryptoQuant underscore that Bitcoin’s current trajectory aligns closely with previous bullish phases. The recovery in demand for Bitcoin has been pronounced, with a noticeable uptick reflecting the fastest monthly growth since April. This resurgence in apparent demand—calculated as the difference between mining issuance and the stock of Bitcoin that has remained inactive for over a year—has been particularly striking.
During the last week, apparent demand surged by 177,000 BTC, marking the highest figure observed since the spring. Notably, this metric reached a significant high of 496,000 BTC shortly after Bitcoin exceeded $72,000 in March. Historical patterns suggest that a rise in apparent demand frequently precedes price rallies. For instance, this surge coincided with a price increase of over 5%.
In addition to rising apparent demand, the increased accumulation of Bitcoin by U.S. spot exchange-traded funds (ETFs) signals increasing market confidence. These financial products have been net buyers of about 8,000 BTC daily, marking their highest purchasing activity since July 21. This growing institutional interest is complemented by the activities of large Bitcoin investors, often referred to as ‘whales.’ Recent trends indicate that these investors have bolstered their holdings by 670,000 BTC over the past year, with this growth surpassing the 365-day moving average.
This combination of heightened demand from ETFs and substantial whale accumulation paints a bullish picture for Bitcoin. Analysts at CryptoQuant emphasize that the expansion of apparent demand is critical for fostering a sustainable upward trend in Bitcoin prices. Looking back at historical precedents, a peak in apparent demand was typically associated with sharp price increases.
Currently, apparent demand stands at 177,000 BTC, significantly below the 490,000-550,000 BTC peaks seen during earlier bull runs. This gap indicates there is ample room for further growth, suggesting that the market is only beginning to awaken from its relative dormancy.
As BTC nears a ten-week high, trading around $68,100, the stage is set for what could be an exciting conclusion to 2023. Whether Bitcoin can replicate the staggering performances from previous halving years remains to be seen, but the indicators of heightened demand, institutional involvement, and active investor interest create a favorable backdrop. If historical patterns continue to hold true, Q4 could indeed be a remarkable chapter in Bitcoin’s ongoing narrative.