Bitcoin Bull Trap or Bull Run? This is what a glass node says.

Bitcoin price is up 40% year-to-date (YTD) and has regained the $23,000 level. However, with continued Concerns With macroeconomic uncertainty surrounding DCG and Grayscale, many investors doubt the sustainability of the recent price rally.

With higher prices, investors may be motivated to exit and use current price levels to gain liquidity, especially after a long and painful bear market in 2022, as Glassnode noted in its Discussed in the report.

In its latest research, the leading on-chain analysis firm examines whether Bitcoin’s recent surge is higher than the price it last saw. Termination of FTX Is there a bull trap or if indeed a new bull run is on the horizon?

Bitcoin suggests on-chain-data.

In this notes the glass node. Reports That the recent price rally in the $21,000-$23,000 region has resulted in a resurgence of several on-chain price models, which has historically meant a “psychological shift in holder behavior patterns.”

The company takes a look at investor price and delta price, noting that in the 2018-2019 bear market, prices stayed within the investor-delta price band for about the same amount of time (78 days) as they do now. (76 days).

“This suggests parity in duration pain during the darkest phase of both bear markets,” states Glassnodes.

In addition to the duration component of the down phase, Glassnode investors also point to a compression of the delta price range. “Taking into account the current price and compression value, a similar confirmation signal will be triggered when the market price reclaims $28.3k.”

Regarding the sustainability of the current move, the analysis notes that the recent rally has been accompanied by a sudden increase in the percentage of supply in profits, which has increased from 55% to 67%.

This 14-day surge was one of the strongest swings in gains compared to previous bear markets (+10.6% in 2015 and 8.3% in 2019), signaling bullishness for Bitcoin.

Bitcoin supply profit
Bitcoin Supply Profit | Source: Glass node

After last year’s capitulation events, when the majority of investors were pushed into losses, the market has now shifted to a “profit-dominated regime”, which Glassnode says will lead to “a sharp decline in the second half of the year”. is a promising sign of post-stress recovery. 2022.”

Less bullish, however, is selling pressure from Bitcoin short-term holders (STHs), traditionally “an influential factor in the formation of a local recovery (or correction) pivot.” The recent rally has pushed the metric above 97.5% in profit for the first time since the November 2021 all-time high, massively increasing the potential for pressure selling in STHs.

Long-term Bitcoin holders (LTHs) are back above their cost basis at current prices, at $22,600, after 6.5 months. This means that the average LTH is now just above its break-even base. In fact, current trends indicate that the following may occur:

Considering LTH-MVRV traded below 1 and the lowest ever printed price, the ongoing bear market so far has been very comparable to 2018-2019.

Bitcoin long term holder
Bitcoin Long Term Holders | Source: Glass Node

Glassnode also reports that the volume of 6-month-old coins has increased by 301,000 BTC since the start of December, proving the strength of HODLing’s belief.

Miners, on the other hand, have used recent price increases to bolster their balance sheets. Miners have spent over 5,600 BTC since January 8.

Finally, the research firm says it’s not yet possible to make a final decision about whether the next bull market is imminent or if bulls are heading into a trap:

[H]Higher prices and the lure of profits after a prolonged bear market encourage supply to become liquid again. […] In contrast, the supply of long-term holders continues to increase, which can be taken as a sign of strength and confidence. […].

At press time, bitcoin was trading at $23.085, relatively calm after recent gains.

BTC USD
BTC price action remains calm, 1-day chart | Source: BTCUSD on TradingView.com

Featured image from iStock, charts from Glassnode and TradingView.com

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