As a seasoned crypto investor with several years of experience in this volatile market, I find the recent Bitcoin price correction to be a normal occurrence following the euphoria of hitting new all-time highs. The Glassnode report sheds some valuable insights into the current market conditions and trends.
The price of Bitcoin (BTC) is currently pulling back after the halving event, leading to a market shift where more coins are being sold than bought. This has dampened the previous excitement or “euphoria” among some investors, as reported by Glassnode, which has pinpointed the specific group responsible for the recent selling trend.
Bitcoin’s rally to $73,000 reactivated sell-side pressure
In the year 2024, Bitcoin’s price performance has been remarkable, reaching new peak levels on March 5, surpassing its prior record. Since then, Bitcoin has experienced a pullback, trading between $60,000 and $67,500 over the past fortnight.
Using an Accumulation Trend Score, the market intelligence firm found that Bitcoin’s ascent to new record highs showed signs of local distribution, reminiscent of comparable structures observed during past bull markets.
Glassnode analyst CryptoVizArt wrote,
“During the early stages of both the 2020-21 and 2023-24 bull runs, we can see a confluence between local regimes of distribution (light colors) and intervals of price contraction. As the market rallies to new highs, sell pressure is reactivated, as investors bring dormant supply back into the market to satisfy the inflowing demand.”
As a crypto investor, I’ve been closely monitoring the market trends using Glassnode’s Accumulation Trend Score. Recently, this score intensified significantly due to the escalating geopolitical tensions in the Middle East. Consequently, the Bitcoin price took a hit and corrected down to around $60,300.
As a market analyst, I’ve observed an significant surge in Bitcoin spot trading volume since the U.S.-listed spot Bitcoin ETFs started trading on January 11. This development has had a positive influence on price momentum. According to Glassnode’s analysis, the Net Unrealized Profit and Loss (NUPL) metric sheds light on how ETFs impact investor behavior. Essentially, this metric measures the difference between the realized and unrealized profits or losses in the market. When NUPL is positive, it indicates that more coins are being held at a profit than at a loss, which can contribute to upward price pressure. Conversely, when NUPL is negative, it implies that more coins are being held at a loss than at a profit, potentially leading to downward pressure on prices. In the context of recent ETF launches, this could mean that investors are increasingly looking to realize their profits by selling their Bitcoin holdings in the spot market, further fueling demand and driving up trading volume.
As a market analyst, I would explain that the Net Unrealized Paper Profit and Loss (NUPL) metric is a measure used to gauge the total unrealized gains or losses on all securities in the market. This metric is calculated by dividing the sum of unrealized profits by the sum of unrealized losses, both figures normalized by the total market capitalization.
Based on Glassnode’s analysis, the NUPL, or Network Upside Price Limit, has exceeded 0.5 for the past seven months. This indicator suggests that the current market condition aligns with the “exuberant stage” or “euphoria phase” of a bull market.
“Using NUPL, we can identify the classic Euphoria phase of a bull market where unrealized profits surpass more than half the market capitalization size (NUPL > 0.5).”
Short-term holders caused the latest correction, but seller exhaustion is comi
The excitement driving Bitcoin’s record prices seems to be waning, as large investments in spot Bitcoin ETFs have slowed down and earlier buyers have started selling. According to Bitcoin’s Realized Loss Breakdown, short-term holders currently make up a significant portion of the market.
According to Glassnode, the cost basis of investors in the age groups of 1-month to 3-months and 3-months to 6-months will become crucial indicators for identifying bull and bear market trends.
When it comes to the immediate price fluctuations, current purchasers exhibit greater responsiveness and a higher likelihood of making transactions as the market begins to decline.
As I delve into market analysis, I notice that when the market price reaches a point where it is close to the cost basis for each sub-group, I would expect their rate of spending to decelerate. This could be an indication of sellers running out of supply in this price range.
In the coming weeks, it’s likely that the market will encounter seller fatigue due to the significant difference between the cost basis of recent investors ($66,700) and their current losses which have exceeded the threshold for 90-day holders on numerous occasions since mid-March.
“Since the price resides within the $60k to $66.7k range, the MVRV condition is met, and it could be argued that the market is hammering out a local bottom formation.”
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2024-05-01 00:53