BTC Price May Need a Drop to $24.4K as Bitcoin Speculators Remain in Profits
Bitcoin (BTC) has room to fall 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”, research firm Glassnode flagged the ongoing influence of “short-term holders” (STHs) on BTC price action.
The profitability reset point is below $25,000
BTC/USD has struggled to overcome the $30,000 resistance in recent weeks, with several forgeries frustrating Bitcoin bulls.
In its latest investigation of chain activity, Glassnode revealed that market newcomers may be responsible – speculative behavior, including profit-taking, has become widespread in 2023.
Among the metrics contributing evidence is market value to realized value (MVRV), which tracks spot price and the chain cost basis for specific investor segments. STH-MVRV reflects the ratio as it affects STHs, defined as those holding bitcoins for 155 days or less.
“The weekly average of this indicator helps identify the possibility of short-term corrections, usually seen when the STH-MVRV is above 1.2, signaling a 20% unrealized profit. Macro tops tend to see even higher values, often above 1.4,” it explained.
At its most recent local peak in mid-March, STH-MVRV reached 1.37 – strikingly close to “macro peak” territory and the highest score since October 2021, just before BTC/USD reached its current all-time highs of $69,000.
As of 2 May, however, STH-MVRV measures 1.15 and falls towards its 1.0 equilibrium point, where the spot price matches the cost base.
However, for that to complete, BTC/USD must fall to $24,400.
“Recent resistance was found at the $30k level, corresponding to STH-MVRV reaching 1.33, giving new investors an average profit of 33%,” Glassnode continued.
“Should a deeper market correction develop, a price at the $24.4K level would bring an STH-MVRV back to a break-even value of 1.0, which has proven to be a support point in rising markets.”
Backing up STH-MVRV is a similar trend in the short-term owner’s unrealized profit vs. loss ratio. This also favors $24,400 as a bullish inflection point.
The BTC supply is being rejuvenated
In 2023, however, it is not only short-term speculators who engage in opportunistic profit-seeking. Long-term holders (LTHs) have sold to rally, says Glassnode, loading the BTC supply to the new market participants.
Related: Bitcoin price sweeps lower, but analysis still predicts $25,000 dive
This has increased the overall proportion of BTC classified as “young supply”, or that which was active at most six months previously.
“The increasing proportion of younger offerings during a rally is an indication of capital flowing into the market,” Glassnode said.
“This also signals that Old Supply (> 6 months) is using, often taking advantage of this demand liquidity, leading to a net transfer of cheap/old coins to new buyers at higher prices.”
So far this year, the supply of young has increased by 8.4%, or 366,000 BTC.
Overall, summarizing “The Week On-Chain,” LTHs remain in control of supply, with net new entries “relatively soft.”
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
