Bitcoin Experiences Post-Halving Retrace Amidst Market Redistribution: Glassnode Analysis
Summary:
Bitcoin undergoes a post-halving retrace, causing a shift from euphoria to widespread distribution, according to a Glassnode report. Hitting a high of $73,000, Bitcoin spurred renewed sell pressure before correcting and consolidating between $60,000 and $67,500 over recent weeks. An Accumulation Trend Score indicates local distribution patterns, which occur during bull market highs. Despite geopolitical tensions causing a drop to $60,300, trading volumes have risen, especially since the introduction of spot Bitcoin ETFs in the U.S. The market appears to be in a "euphoria phase," but recent Bitcoin buyers are predominating, perhaps signaling a temporary selling exhaustion.
The digital currency Bitcoin (BTC) continues to experience a downturn following the post-halving period, with market conditions pointing towards widespread redistribution. This shift has considerably toned down the previous period of euphoria, as Glassnode's report indicates. The report identifies the investor group responsible for the current selling activities. Following Bitcoin's surge to $73,000, sellers reacted, leading to pressure in the market.
So far in 2024, Bitcoin has enjoyed a notable ride, reaching its peak on March 5. However, in the ensuing period, it has experienced a correction and has been oscillating between $60,000 and $67,500 for the last two weeks.
Glassnode, a market analysis company, used an Accumulation Trend Score to indicate that Bitcoin's surge demonstrated local patterns of distribution, reflecting similar patterns seen in prior bull market periods. CryptoVizArt, a Glassnode analyst, suggested that each time the market soared to new highs, it triggered renewed selling pressure as dormant supplies were pulled back into the market to accommodate incoming demand.
The Accumulation Trend Score amplified as tension in the Middle East grew, leading to a Bitcoin decline to $60,300. Since the introduction of spot Bitcoin ETFs in the U.S on January 11, Bitcoin's spot trading volume has significantly increased, positively affecting its price momentum. Glassnode insights have related the ETFs' impact on investor behavior to the Net Unrealized Profit and Loss (NUPL) metric, which gauges the scale of the market's overall net gain (or loss) taking market capitalization into account.
The report also highlighted that the NUPL has exceeded 0.5 for the past seven months, an indication that the market is in what could be termed the "euphoria phase" of a bull market.
Recent purchases have triggered the slide in Bitcoin's value. However, it appears a temporary phenomenon as indicators point to an impending seller exhaustion. Currently, short-term holders are dominating the market. Glassnode anticipates that the cost basis for new age groups, represented by 1 to 3 months and 3 to 6 months cohorts, will serve to distinguish between bull and bear market conditions.
While recent purchases tend to be more reactive to short-term price fluctuations and predisposed to cash out during market sell-offs, the projection is that their spending will slow down as market prices approach respective cohort cost bases.
There are high chances of an impending seller exhaustion as the cost base for the 1-week to 1-month holder cohort stands at $66,700. Additionally, their realized loss has repeatedly exceeded the 90-day level since mid-March. With current prices within the $60,000 to $66,700 range, the Market-Value to Realized-Value (MVRV) condition is met, suggesting the market is gradually achieving a local bottom formation.
This piece does not offer investment advice. Investment and trading carry risks, and individuals should carry out personal research prior to making any decision.
Published At
5/1/2024 12:47:42 AM
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