The price of Bitcoin is currently undergoing a retracement after the halving event, leading to a redistribution of wealth in the market and a decrease in the “euphoric phase,” according to a report by Glassnode. The report also identifies the group of investors responsible for the current sell-side activity.
Bitcoin’s price reached an all-time high of $73,000 before experiencing a correction and consolidating between the $60,000 and $67,500 range in the past two weeks. Glassnode analyzed the market using an accumulation trend score and found that the rise in Bitcoin’s price revealed patterns of local distribution, similar to previous bull runs.
Glassnode explained that the accumulation trend score increased as geopolitical tensions in the Middle East escalated, leading to a correction to $60,300. The introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States on January 11 has also positively impacted Bitcoin’s price momentum.
Glassnode used the net unrealized profit and loss (NUPL) metric to analyze the impact of ETFs on investor behavior. The NUPL metric measures the magnitude of net paper profits or losses held by the market, normalized by the market cap. According to Glassnode, the NUPL has been above 0.5 for the past seven months, indicating a “classic euphoria phase of a bull market.”
The recent correction in Bitcoin’s price can be attributed to short-term holders who have dominated the market. However, Glassnode expects the cost basis of younger age bands, such as one-month to three-month and three-month to six-month cohorts, to become valuable tools for understanding market structures in bull and bear markets.
As the market price approaches each cohort’s cost basis, their pace of spending is expected to slow down, indicating seller exhaustion. Glassnode predicts that seller exhaustion is likely to occur in the coming weeks, as the cost basis of one-week to one-month holders is $66,700 and their realized loss has exceeded the 90-day level multiple times since mid-March.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment decisions.