Bitcoin (BTC) continued its decline on July 4 and is now trading 20% below its all-time high of $73,835. The current price action reflects “apathy and boredom” dominating the market, but on-chain metrics suggest Bitcoin is preparing for a “bigger move” in the near future, according to report by Glassnode.
Bitcoin Investor Returns Still “Amazing”
Bitcoin price has had an impressive run in 2024, with the leading cryptocurrency surpassing its all-time high on March 5. Since then, Bitcoin has corrected, falling below $60,000 three times in the past ten days, leading to a “fear and pessimism” sentiment as apathy prevails.
Still, the Market Value Realized Value (MVRV) metric shows that the majority of Bitcoin investors are still profitable, according to market analysis firm Glassnode.
The chart below shows that returns for many investors are still very high, with the average price of coins still holding a two-fold profit.
Glassnode analysts write:
“This is the level that often separates the ‘Ecstasy’ and ‘Hype’ phases of a bull market.”
Bitcoin MVRV Ratio | Source: Glassnode
Glassnode explains that Bitcoin’s accumulation between $60,000 and $70,000 since March has led to widespread uncertainty and a market that has been unable to establish a solid trend in any direction.
According to the on-chain analytics firm, when the spot price fluctuates between the all-time high and the True Market Mean, it indicates a “robust bull market.” According to the chart below, the True Market Mean is valued at $50,000, which represents the average cost basis per active investor.
“Currently, prices remain in an enthusiastic bull market mode after several short-term dips into the euphoric zone.”
Bitcoin True-market Mean | Source: Glassnode
Glassnode said the $50,000 price level is a key level that Bitcoin price needs to maintain “if the macro bull market is expected to continue.”
A new report by 10X Research suggests that if Bitcoin fails to stay above $60,000, it will quickly drop to lower support levels, possibly reaching as low as $50,000.
“Psychologically, a break of $60,000 for Bitcoin would be damaging, as the price could drop quickly to the nearest support level, which could be $55,000 or even $50,000.”
Compression volatility signals a big move is coming
After several months of price range-bound trading, Glassnode analysts have noticed a decline in volatility across multiple timeframes. Bitcoin’s Realized Volatility over the 1-week, 2-week, 1-month, 3-month, 6-month, and 1-year timeframes all saw negative changes over the 30-day period.
When this happens, “a signal is triggered that suggests volatility is compressing, and so are investor expectations of lower volatility,” the report said.
Measuring Bitcoin Volatility | Source: Glassnode
Historically, a compression of volatility is often followed by a significant market move, whether up or down.
Glassnode also assessed the percentage gap between the highest and lowest prices over the past 60 days and found that Bitcoin’s market volatility continues to “compress to a rare degree.”
If compression occurs after such prolonged accumulations, it usually means that prices are preparing for “big market moves”.
Regarding the Sell-Side Risk index, analysts evaluated the total profits and losses realized by investors compared to the size of assets – Realised Cap – and found that this index has fallen to a historical low.
“This suggests that a balance has been established in this price consolidation and points to expectations of increased volatility in the near future.”
Short-term Bitcoin Holders’ Risk-to-Sell Ratio | Source: Glassnode
This means that the current trading range is in its “final stages before range expansion occurs”.
You can see the BTC price here.
Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do their own research before making any investment decisions. We are not responsible for your investment decisions.
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According to Cointelegraph
