Bitcoin (BTC) price struggled to hold above $70,000 on May 22 as Glassnode analysts suggested the pioneering cryptocurrency was preparing for a “bigger move” towards the upside.
Easing sell-side pressure to ease distribution and lower Bitcoin prices
Data from Cointelegraph Markets Pro and TradingView shows that the price of Bitcoin is steadily rising after a prolonged decline from all-time highs. During this decline, the BTC market experienced extreme distribution pressure, causing the price to fall to $56,500 on May 1, the lowest since March 5.
A recent report from Glassnode attributed Bitcoin’s recent recovery to $71,000 to a slowdown in sell-side pressure and “volatility compression” despite most major on-chain indicators trending toward balance.
Using the Supply Last Active Age Band metric, Glassnode analysts noted that the one-year and two-year cohorts have experienced “significant declines” over the past two months. The 3+ age group continues to grow, suggesting this group is “generally waiting for higher prices before spending their coins.”
Meanwhile, long-term holder (LTH) binary spending metrics have been declining over the past few weeks, suggesting distribution pressure has eased.
“However, over the past few weeks this distribution pressure has eased noticeably, giving the bulls more breathing room and reducing resistance overall.”
Glassnode analysts also observed that regional differences are starting to emerge between LTH and STH supply, “adding weight to the case for cooling distribution pressures among mature investors.”
Reset macro
Bitcoin’s recovery from its lows of $56,500 appears to have reset investor expectations regarding price valuation and the long-term market outlook by various metrics. According to a Glassnode report, key on-chain indicators have rebalanced, suggesting a massive upward move for BTC.
The company’s on-chain data shows that new capital flowing into the Bitcoin network has slowed significantly compared to all-time highs, but realization limits are still positive enough to stimulate price action.
“The indicator remains in positive profit-dominant territory and is returning to its equilibrium position. However, as selling headwinds from mature investors diminished, this wave of moderate demand was enough to stimulate price action.”
Using sell-side risk metrics to monitor volatility, Glassnode analysts assessed the total value locked by coins spent on the chain (realized gains + realized losses) relative to the size of the asset class (realized limits). They found that sell-side risk ratios have decreased significantly in recent weeks, suggesting that the market has found some balance in this adjustment process.
Glassnode concluded that after Bitcoin’s run to its all-time high of $73,835, there was an intensive period of mature investor distribution, but sell-side pressure was noticeably reduced.
“This has reduced headwinds and indirect resistance, and even moderate demand could stimulate positive price action,” the report noted.
Bitcoin price enjoys strong fundamental support
Bitcoin plummeted to $56,500 on May 1 before recovering sharply to above $60,000, a level it has remained at since then. Popular trader and analyst Daan Crypto Trades said:
“Bitcoin’s monthly chart is pretty clean. I almost swallowed a candle last month. It also held a key area around the ~$60,000 area, which recorded the highest monthly candle close at the peak of the last 2021 cycle.”
Data from on-chain data provider IntoTheBlock reinforces this level of importance. The In/Out of the Money Around Price (IOMAP) model shows two important support levels above $60,000. The price range was between $61,553 and $67,860, with approximately 1.5 million BTC previously purchased from 3.66 million addresses.
This demand area is strong enough to create the buying pressure needed to push prices higher.
Another analyst Ali Martinez shared the following chart on the X social platform showing MVRV price bands and said:
“If #Bitcoin continues to trade above $65,125, the next local $BTC high before a brief correction could be around $77,593!”
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.