Bitcoin’s price made efforts to stay above $70,000 on May 22, with Glassnode analysts suggesting that the leading cryptocurrency is gearing up for a significant upward movement. BTC’s price has been steadily rising after a prolonged downtrend from its all-time highs. During this period, BTC experienced intense distributive pressure, resulting in a low of $56,500 on May 1, the lowest since March 5. Glassnode’s recent report highlights that Bitcoin’s recovery to $71,000 is due to a slowdown in sell-side pressure and a compression of volatility, even though most key on-chain metrics are moving towards equilibrium.
Glassnode analysts noted a significant decline in the one-year and two-year cohorts based on the Supply Last Active Age Band metric over the past two months. On the other hand, the 3y+ cohort continues to increase, indicating that this group is waiting for higher prices before selling their coins. The Long-Term Holder (LTH) Binary Spending Indicator has also been declining in recent weeks, indicating reduced distribution pressure. Glassnode analysts observed a local divergence between LTH and STH Supply, suggesting a cooling off of distribution pressure among mature investors.
Bitcoin’s recovery from the $56,500 low seems to have reset price valuations and investor expectations for the long-term market outlook. Glassnode’s on-chain data shows that although new capital flowing into the Bitcoin network has slowed down from its all-time highs, the realized cap is still positive enough to drive price action. By using the Sell-Side Risk metric to monitor volatility, Glassnode analysts found that the Sell-Side Risk Ratio has significantly declined in recent weeks, indicating that the market has reached a level of equilibrium during this correction. Glassnode concludes that while there was intense distribution by mature investors after Bitcoin’s run towards the all-time high of $73,835, sell-side pressure has decreased, reducing headwinds and overhead resistance.
Bitcoin’s price recovery above $60,000 after the flash crash to $56,500 on May 1 has been supported by strong underlying demand. The In/Out of the Money Around Price (IOMAP) model from on-chain data provider IntoTheBlock shows that two significant support lines are above the $60,000 level, where approximately 1.5 million BTC were previously bought by 3.66 million addresses. This robust demand area is expected to generate the buying pressure needed to push the price higher. Furthermore, the MVRV Pricing Bands chart shared by analyst Ali Martinez indicates that Bitcoin’s price is within reasonable levels, suggesting that it is not overvalued.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and make informed decisions when it comes to investments and trading, as they involve risks.