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Bitcoin (BTC) has room to drop below $25,000 to flush out a recent influx of speculators, research shows.
In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode flagged the ongoing influence of “short-term holders” (STHs) on BTC price action.
Profitability reset point lies below $25,000
BTC/USD has struggled to overcome $30,000 resistance in recent weeks, and multiple fakeouts have frustrated Bitcoin bulls.
In its latest investigation into on-chain activity, Glassnode revealed that market newcomers may be responsible – speculative behavior, including profit-taking, has become prevalent in 2023.
Among the metrics contributing evidence is market value to realized value (MVRV), which tracks spot price and the on-chain cost basis of specific investor segments. STH-MVRV reflects the relationship as it impacts STHs, defined as those hodling bitcoins for 155 days or less.
“The weekly average of this indicator, helps to identify the possibility of short-term corrections, typically seen when STH-MVRV is above 1.2, signalling a 20% unrealized profit. Macro tops tend to see even higher values, often above 1.4,” it explained.
At its latest local peak in mid-March, STH-MVRV hit 1.37 – conspicuously close to “macro top” territory and the highest score since October 2021, just before BTC/USD hit its current all-time highs of $69,000.
As of May 2, however, STH-MVRV measures 1.15 and is falling toward its 1.0 point of equilibrium, where spot price matches cost basis.
For that to complete, however, BTC/USD would need to fall to $24,400.
“Recent resistance was found at the $30k level, corresponding with STH-MVRV hitting 1.33, and putting new investors at an average 33% profit,” Glassnode continued.
“Should a deeper market correction develop, a price of $24.4K level would bring a STH-MVRV back to a break-even value of 1.0, which has shown to be a point of support in up-trending markets.”
Backing up STH-MVRV is a similar trend in the ratio of short-term holder unrealized profit versus loss. This, too, favors $24,400 as a bullish inflection point.
BTC supply rejuvenates
In 2023, however, it is not only short-term speculators engaging in opportunistic profiteering. Long-term holders (LTHs) have been selling into rallies, Glassnode says, unloading BTC supply onto those new market entrants.
Related:
Click Here to Read the Full Original Article at Cointelegraph.com News…
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