Bitcoin has entered a range-bound trading phase, sustained by sufficient demand to absorb partial coin distribution by hodlers. A decisive price movement in either direction is needed to invigorate the market, according to Glassnode.
Despite choppy price action, the unrealized profit of #Bitcoin investors remains constructive.
However, volumes across all market facets are declining markedly as an equilibrium between demand and sell-side forces is established.
Discover more in the latest Week On-Chain… pic.twitter.com/N5jFsHPPlJ
— glassnode (@glassnode) June 18, 2024
Experts noted that investors remain largely in a favorable position, with over 87% of held bitcoins being profitable.
The average market participant’s profit, as measured by the MVRV metric, stands at 120%, characteristic of trading near the ATH. The indicator remains above its annual baseline, indicating a sustained upward macro trend.
Historically, breakouts above one standard deviation (SD) of MVRV coincide with the formation of a bull run peak. Currently, the price stabilizes within a range of 0.5 to 1 SD, highlighting statistically high profits held by the average investor after recent turbulence.
Analysts explained that after reaching a new ATH, the market often requires ample time for consolidation and to “digest” the excess supply. As equilibrium is established, this leads to a reduction in both realized profits and seller pressure.
The latter naturally reduces the supply overhang. So far, the price has not felt the strength of the March rally. According to experts, demand is sufficient to keep quotes within a range, but not enough to restore upward momentum.
The reduction in on-chain transferred value indicates a decrease in speculative appetite and growing indecision among market participants.
A similar picture has formed in terms of activity on centralized exchanges, including daily deposit metrics. These have fallen for short-term investors from a March peak of 55,000 BTC to 17,400 BTC.
For hodlers, the value does not exceed 1,000 BTC, equivalent to <0.006% of the volume of coins they hold. In other words, long-term investors have reached equilibrium. Higher or lower prices are needed to stimulate further action, experts explained.
Currently, the average profit per bitcoin transferred to an exchange is ~$5,500, while the average loss is ~$735. The former figure is 7.5 times higher than the latter. Only on 14.5% of trading days has this ratio been higher.
“This indicates that hodlers are still offloading assets, and demand is sufficient to absorb seller pressure, but not strong enough to push prices higher. In other words, the market structure is more favorable for range traders and arbitrage strategies than for directional and trend trading strategies,” analysts emphasized.
Earlier, Glassnode noted that arbitrage between spot and derivative markets is restraining buyer pressure in BTC-ETF.
In April, Bernstein predicted Bitcoin could reach $200,000 by the end of 2025, driven by expectations of “unprecedented demand for spot exchange-traded funds.”