Bitcoin (BTC) has room to fall below $25,000 to drive out the recent influx of speculators, research shows.
In the latest edition of its weekly newsletter, “The Week On-Chain”, the analysis company Glassnode highlighted the continued influence of “short-term holders” (STH) on BTC price action.
The reset point of profitability is below USD 25,000
The BTC/USD pair has struggled to break above the $30,000 resistance in recent weeks, and multiple “false rallies” have frustrated Bitcoin bulls.
In his latest research on on-chain activity, Glassnode revealed that newcomers to the market may be to blame: speculative behavior, including profit-taking, has become prevalent in 2023.
Among the metrics that provide evidence is the ratio of market value to realized value (MVRV), which tracks the spot price and on-chain cost base of specific investor segments. STH-MVRV reflects the relationship that affects STHs, defined as those who have invested in Bitcoin for 155 days or less.
“The weekly average of this indicator helps to identify the possibility of short-term corrections, typically seen when STH-MVRV is above 1.2, signaling a 20% unrealized profit. Macroeconomic highs tend to register even higher values , often above 1.4”, explained.
At its last local high in mid-March, STH-MVRV reached 1.37—strikingly close to “macro top” territory and the highest score since October 2021, just before the BTC/USD pair hit its current all-time highs of $69,000.
As of May 2, however, STH-MVRV measured 1.15 and is falling toward its breakeven point of 1.0, where the spot price matches the cost basis.
For that to be complete, however, the BTC/USD pair would have to fall as low as $24,400.
“Recent resistance was found at the $30,000 level, which corresponds with STH-MVRV hitting 1.33, and putting new investors in for a median 33% profit.”continued Glassnode.
“Should a deeper market correction play out, a price of $24,400 would return one STH-MVRV to an equilibrium value of 1.0, which has proven to be a foothold in bullish markets.”
Backing STH-MVRV is a similar trend in the ratio of unrealized gains versus short-term holder losses. This also favors the $24,400 level as a bullish turning point.
BTC supply rejuvenates
In 2023, however, it’s not just short-term speculators who are taking advantage of opportunities. Long-term (LTH) holders have been selling on rallies, Glassnode said, unloading the BTC supply on new market entrants.
This has increased the global proportion of BTC classified as “young supply”, that is, active at most six months before.
“The increase in the proportion of young supply during a rally is an indication of the inflow of capital to the market”says Glassnode.
“This also indicates that old supply (>6 months) is spending, often taking advantage of this demand liquidity, leading to a net transfer of cheap/old coins to new buyers at higher prices.”
Year-to-date, young supply is up 8.4%, or 366,000 BTC.
In general, “The Week On-Chain” summarized that LTH continues to control supply, with net new inflows “relatively soft.”
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