The Bitcoin (BTC) price continued its slump on June 3, and is now trading 20% below its all-time high of $73,835. While the current price action reflects the “apathy and boredom” that dominates the market, on-chain indicators suggest that Bitcoin is gearing up for a “bigger move” in the near future, according to a Glassnode report.
Bitcoin Investor Profitability Remains ‘Very Solid’
The Bitcoin price has enjoyed an impressive run so far in 2024, with the flagship cryptocurrency hitting a new all-time high on March 5. Since then, Bitcoin has corrected and fallen below $60,000 three times in the past 10 days, with widespread apathy and “fear and bearish” sentiment.
Despite this, a significant number of Bitcoin investors are still making profits, according to market intelligence firm Glassnode, as measured by the Market-to-Realized-Value (MVRV) metric.
The chart below shows that overall investor profitability remains very high, with the average coin still maintaining a 2x earnings multiple.
Glassnode analysts wrote:
“This is often the level that separates the ‘maniacal’ and ‘euphoric’ bull market phases.”
Glassnode explains that since March, there has been widespread indecision as Bitcoin has accumulated in the $60,000-$70,000 range, and the market has failed to establish a solid trend in either direction.
According to the data aggregator, when the spot price oscillates between the all-time high and the actual market average, it indicates a “frantic bull market.” According to the chart below, the actual market average is valued at $50,000, which represents the average cost basis per active investor.
“Current prices remain within the Enthusiastic bull regime after a few very brief excursions into Euphoric territory.”
Glassnode says $50,000 is the key price level that Bitcoin price will remain above “if the macro bull market is expected to continue.”
A new report from 10X Research says that if Bitcoin fails to hold above $60,000, it could drop sharply to lower support levels, potentially even to $50,000.
“Psychologically, a Bitcoin price break of $60,000 could be damaging, as the price could quickly fall to the nearest support level of $55,000 or $50,000.”
Volatility compression is a signal that the ‘big market is ahead’.
After several months of range-bound price action, Glassnode analysts have noticed a decline in volatility across multiple time frames. Bitcoin’s realized volatility over 1-week, 2-week, 1-month, 3-month, 6-month, and 1-year time frames has shown a negative change over 30 days.
The report says when this happens, “a signal is generated that volatility is being compressed and investors should expect lower volatility going forward.”
Volatility compression is a period of time that represents a decrease in the historical volatility or fluctuations in Bitcoin price performance. This is often followed by significant market movements, whether up or down.
Gassnode also evaluated the percentage range between the highest and lowest price ticks over the last 60 days and found that Bitcoin’s market volatility “continues to be compressed to levels rarely seen.”
When this compression occurs after a long period of consolidation, it usually means that prices are preparing for a “big market move.”
When it comes to the short-side risk ratio, analysts found that this metric, which measures the absolute sum of realized gains and losses an investor has secured for a given size of assets, or the realized ceiling, has shrunk to a historic low.
“This suggests that some level of equilibrium has been established during this price consolidation and suggests that volatility is likely to increase in the near future.”
This means that the current trading range is in the “late stages of development towards the next range expansion.”
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.