Author: 636Marx

Bitcoin seems to have stabilized at $90,000, needing just a small increase to break through the long-awaited $100,000 mark. With Bitcoin reaching a new high of $94,000 yesterday, I began to seriously consider the question: Has Bitcoin already peaked, and if not, how much more room for growth is there above?

FOMO Eases, Market Returns to Rationality

The fear of missing out (FOMO) has always been a traditional driving force behind Bitcoin's rebounds. However, current market sentiment seems less optimistic than in previous bull market cycles. Recent data from the internet shows that, compared to the excitement following major events like the U.S. presidential election on November 5, the U.S. hot search terms for Bitcoin have dropped to 22, possibly including many mainland users using VPNs.

Main Market Sentiment Indicators

The Fear and Greed Index for cryptocurrencies has been hovering above 80 for the past week, peaking at 90. Historically, such high readings typically occur before local price peaks. The last time this index reached these levels was during Bitcoin's rise to $60,000 in early 2021.

Compared to past bull markets, global Google search terms for Bitcoin have been declining over the past 7 days. Some believe this is a sign of market maturity, while another possibility is that discussions about Bitcoin lack new user participation.

The Foundations of Bitcoin Are Shaking

Bitcoin mining is the largest and primary source of incremental capital inflow. In the third quarter of 2024, Argo Blockchain's latest financial report revealed facts contrary to Bitcoin's thriving narrative.

1. Decreased Profit Margins: Argo reported a mining profit margin of 8% in the third quarter, a significant drop from 58% in the same period last year. This decline is mainly due to the lack of electricity subsidies that previously supported the business.

2. Decreased Revenue: Argo's quarterly revenue fell from $10.4 million in Q3 2023 to $7.5 million. Despite reducing debt by $12.4 million, the company still reported a net loss of $6.3 million for the quarter.

3. Increased Costs: Rising energy prices and an increasingly crowded mining ecosystem further squeezed profit margins, causing difficulties for small and medium-sized miners.

Russia is set to implement strict Bitcoin mining restrictions, reportedly prohibiting Bitcoin mining in certain regions from December 2024 to March 2031, citing that Bitcoin mining disrupts local winter heating.

Assessing Whether Bitcoin Will Decline or Rise?

Several on-chain indicators provide valuable insights into Bitcoin's current state and potential trends:

MVRV Ratio

The Market Value to Realized Value ratio compares Bitcoin's market capitalization to its realized cap (the total purchase price of all tokens). A high MVRV, typically above 3.7, indicates a market top. Currently, this ratio stands at 2.67, suggesting there may still be room for price increases before reaching overbought levels.

Realized Capital Inflow

This indicator measures the capital flowing into the market, with strong growth indicating robust demand. Bitcoin ETFs continue to see healthy inflows, suggesting the potential for sustained bullish momentum.

Token Days Destroyed (CDD)

This indicator tracks dormant Bitcoin activity, which currently remains below critical thresholds. A significant increase may signal that long-term holders are starting to take profits, potentially leading to price declines. The commonly recognized number of dormant Bitcoins is 15 million, with the possibility of lost private keys accounting for about 10%-30% of 19 million.

Do Bitcoin Spot ETFs Limit the Height of Bitcoin's Rise?

The launch of Bitcoin spot exchange-traded funds (ETFs) in the U.S., such as those from BlackRock, Ark, and Fidelity, has significantly catalyzed the recent rebound. These ETFs have seen substantial inflows, indicating strong institutional demand. However, I believe the ETF hype has already been digested by the market, and any excess gains are simply profits for these institutions.

Of course, as the Federal Reserve continues to raise interest rates, Bitcoin also faces competition from traditional assets like U.S. Treasury bonds.

My Perspective:

There is no doubt that Bitcoin is still in a bull market phase. Out of the 21 million Bitcoins, 2 million remain unmined, and the ongoing halving mechanism will drive up Bitcoin's price.

However, it is worth noting that Bitcoin lacks incremental users based on trading addresses. Whether due to energy issues or political factors, the instability of Bitcoin mining undermines its foundations. As an ordinary user, I do not recommend chasing high prices for Bitcoin, nor do I suggest entering through contracts; every pullback and rise is accompanied by regret over the harm done.