Is The Next Market Phase For Another Rally Near?

• Bitcoin remains stable above $75K despite a 1.7% pullback.
• Rising new address creation and increased open interest signal strong market participation, but warrant careful observation.

Bitcoin [BTC] has shown notable resilience by maintaining its position above the $75,000 price level. This stability comes after the cryptocurrency achieved a new all-time high of $76,872 on the 7th of November. 

Although Bitcoin has since faced a slight correction, with prices dipping 1.7% from the peak, the asset continued to exhibit a strong footing around the $75,000 mark.

Analysts attributed this development to a combination of increased market confidence, new liquidity, and shifting holder dynamics.

Amid this market performance, a CryptoQuant analyst, identified as Mignolet, provided insight into the evolving Bitcoin cycle. According to Mignolet, the conditions necessary for Bitcoin to enter a second phase of its current market cycle were aligning.

“After Phase 1, the Long-Term Holder (LTH) supply, which had been accumulating again, has begun to be distributed,” Mignolet explained. 

Source: CryptoQuant

For Bitcoin to move into Phase 2, a notable increase in Short-Term Holder (STH) supply through the introduction of new capital was required. Mignolet pointed out that this new liquidity influx was already occurring, mirroring patterns observed in the 2017 cycle. 

The cyclical behavior implied that Bitcoin’s market dynamics were once again setting the stage for a potential uptrend, driven by increased activity and new entrants into the market.

Indicators point to growing momentum in Bitcoin metrics

In addition to analyzing holder behaviors, several key metrics provide further insight into Bitcoin’s market health. One such indicator was the number of new Bitcoin addresses. According to Glassnode data, this metric has been on an upward trajectory. Following a mid-October low of 242,000 new addresses, the figure has climbed to over 350,000 new addresses. 

Source: Glassnode

This increase suggested that more participants were entering the market, which could bolster demand and provide support for Bitcoin’s price in the long term.

A rise in new addresses typically reflects growing interest and adoption, factors that can contribute to sustained upward price momentum if maintained.

Another noteworthy metric was Bitcoin’s open interest in futures contracts, which showed a moderate increase. Data from Coinglass indicated that open interest has risen by 1.32% to a current valuation of $46.59 billion. 

Source: Coinglass

This rise signaled that more traders were taking positions in the market, potentially expecting further price movement.

Read Bitcoin’s [BTC] Price Prediction 2024–2025

However, it is essential to note that Bitcoin’s open interest volume has experienced a notable decline, falling by 41.01% to a current valuation of $69.81 billion. 

The decline in open interest volume may indicate that some traders were closing their positions, possibly as a precautionary measure amid the recent price correction.