Settlement of the Bitcoin market
According to a recent report from Glassnode, the Bitcoin market has experienced a cooling after months of extreme circulation pressure. This comes after a significant period of distribution at all-time highs (ATH). Despite lighter divestiture activity, capital inflows have been relatively small. However, as volatility decreases, larger moves may occur.
supply-side slowdown
A strong Bitcoin market naturally comes under sell-side pressure as rising prices incentivize long-term holders to distribute some of their holdings. However, the supply held by the 3+ cohort continues to increase, suggesting that this cohort is generally waiting for higher prices before spending their coins. As of this writing, more than half of Bitcoin’s coin supply has not been traded on-chain in over two years.
top heaviness tracking
The report also utilizes the URPD indicator to evaluate coin density on a cost basis, centered on current spot prices. With approximately 15.9% of the coin’s supply currently held just below the spot price, a continued influx of demand could potentially fuel a price discovery period. Only 1.1% of circulating supply remains above the current spot price.
Volatility Compression
As supply-side pressures and capital inflows ease, markets have turned to volatility tools to support expectations of the next move. Volatility continues to compress to levels typically seen after extended periods of consolidation and prior to large market movements.
Summary and Conclusion
After mature investors distributed heavily at $73,000 ATH, sell-side pressure decreased noticeably. This reduced headwinds and indirect resistance, and even moderate demand was enough to stimulate positive price action. At the same time, volatility may continue to compress over the longer term, with dense supply clusters forming below current spot prices, potentially providing a strong base.
Image source: Shutterstock
. . .
tag