Wednesday, March 29, 2023

Bitcoin price is entering a “transition phase”, according to BTC on-chain analysis

Traders’ hopes for Bitcoin (BTC) seemed to be dashed in the first week of March, when several major metrics on the chain resisted.

Now the price of Bitcoin is threatening to touch the $22,000 level and a wave of short sellers will benefit if it does. If the short sellers hit the price, some speculators believe that the price of Bitcoin could drop as low as $19,000.

Bitcoin options sorted by strike price. Source: Coinglass

Some analysts still see the price of BTC reaching $25,000 in the near term, and on-chain data highlights some reasons for the resistance of the price to higher levels.

He reviewed the Price Metric for each deck of Profit Taking

Market share concerns over Federal Reserve rate hikes and high inflation are strong economic headwinds toward the price of Bitcoin, encouraging investors to appreciate the value of Bitcoin money. To measure on-chain TVM, Bitcoin holders can be grouped into groups based on how long they have held BTC and the average acquisition cost.

Investors who bought BTC in the last 6 months benefited from the early bear market conditions and have an average hedged price of $21000, putting them in the profit zone. The median market capitalization of all BTC holders is $119,800, even for profit.

On the other hand, BTC held for more than 6 months has realized a higher price than the rest of the market pool of $23,500. When Bitcoin breaks above $23,500, holders who had poor TVM returns could push for more than 6 months to the breakout as they want to take profit.

The base price of the supply of Bitcoin is maintained over time. Source: Glassnode

The influx of liquor is rising, but it pales in comparison to 2022.

Bitcoin price is highly reactive to interest rates and the US Dollar Index (DXY), putting pressure on risk assets. The negative impact of these factors is good for short sellers, but bad for the price of Bitcoin. The best way for the Bitcoin price to withstand pressure from short sellers is for new buyers to enter the market wanting to go long.

Looking at net deposits in exchanges is a good way to measure new liquidity and this metric currently reports a 34% rebound by early 2023, but lagging behind the annual daily average of $1.6bn.

Bitcoin volume exchanges. Source: Glassnode

Currently, the general consensus among analysts is that the ability to bring new liquidity to the cryptocurrency market has been hindered by a crackdown on banks that support cryptocurrency-focused companies.

Bitcoin Unrealized C. Rally Reflects Previous Cycles

While some Bitcoin investors were taking profit, positive signs are appearing on the chain when looking at the Net Null Gain/Loss (NUPL) metric. The NUPL metric shows the difference between empty Bitcoin gains and empty losses within the BTC supply.

According to Glassnod, the NUPL is metrical at 6 cal.

Since mid-January, the NUPL weekly average has moved from a net loss to a positive position. This indicates that the average Bitcoin owner now has a net profit of approximately 15% of the capitalization of the Governor. the market structure is equivalent to transitory growth in bear markets of the past.’

NUPL ABOUT BITCOIN Source: Glassnode

Although Bitcoin 2023 momentum may be delayed in mid-February and many remain bullish, there are positive signs that the transition from the deepest period of the bear market is near.

The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. All investing and trading involves risk, so readers should do their research before making a decision.

Research into crypto assets is not regulated. They may be eligible for sales and all the money invested will be lost. The services or products offered are not directed at or accessible to investors in Spain.

Nation World News Desk
Nation World News Desk
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