According to a recent report by Glassnode, the Bitcoin market is undergoing a period of cooling off following months of intense distribution pressure. Despite relatively low actual FDI, the decrease in sell-side pressure and reduced volatility suggest the potential for a significant shift on the horizon.
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markets are seeing a slowdown after facing months of high distribution pressure. While capital inflows remain modest, the easing of sell-side pressure and decrease in volatility indicate the possibility of a major move in the near future.
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May 21, 2024
Realized Cap Indicates Decrease in New Capital Inflows
In essence, high
Bitcoin
markets are susceptible to sell-side pressure, as high price levels prompt long-term holders to sell off some of their cryptocurrency. This was evident in March and April when long-term investors sold coins to meet new demand, leading to a decrease in Supply Last Active for 1 and 2 years.
However, the supply held by investors who have held Bitcoin for over three years has been increasing, indicating their willingness to wait for higher prices. Current statistics show that over 50% of all Bitcoins have not been moved on-chain in the past two years.
The long-term holder binary spending indicator, which shows the distribution pressure of HODLers, saw a significant decrease in LTH supply in March when Bitcoin reached $73,000. This decrease in distribution pressure has allowed the market more freedom to move and less resistance in recent years.
Conversely, the decrease in LTH has been linked to an increase in the supply of STHs, who are new players in the market. This contrast between LTH and STH supply signals a slowdown in distribution pressure among experienced investors. The Liveliness metric also supports this shift, showing that the Bitcoin network is generating more coins than it is losing.
Bitcoin Market Processes Recent Supply Redistribution
On the demand side, the Realized Cap is a unique metric in on-chain analytics that represents the total USD-liquidity stored in Bitcoin, currently estimated at $574 billion. The Realized Cap suggests a slowdown in the flow of new capital into developing countries.
After digesting the recent supply distribution, with the daily change rate of Realized Cap indicating capital inflows, the market remains in a positive profit zone that is gradually moving towards balance.
Additionally, the URPD metric, which measures the proximity of other coins to the current price, shows strong support just below the current spot price, with 15.9% of the total supply held at these levels. In contrast, only 1.1% of the circulating supply is above the current spot price, indicating potential for price discovery if demand continues over time.
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Glassnode Bitcoin Market Cools Down Following Heavy Selling Pressure