Bitcoin price preps for ‘bigger move’ as on-chain metrics ‘reset’

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Bitcoin’s (BTC) price strived to hold above $70,000 on May 22 as Glassnode analysts suggested that the pioneer cryptocurrency is preparing for a “bigger move” to the upside.  

BTC/USD daily chart. Source: TradingView

Easing distribution and slowing sell-side pressure back Bitcoin price

Data from Cointelegraph Markets Pro and TradingView show that Bitcoin’s price has been steadily ascending after an extended downtrend from all-time highs. During this drawdown, BTC markets experienced periods of intense distributive pressure, which pulled its price to a low of $56,500 on May 1, the lowest since March 5.

Recent reporting from Glassnode notes that Bitcoin’s recent recovery to $71,000 is due to slowing sell-side pressure and “compression of volatility,” even as most key on-chain metrics tend toward an equilibrium.

Using the Supply Last Active Age Band metric, Glassnode analysts noted that the one-year and two-year cohorts experienced a “large decline” over the last two months. The 3y+ cohort continues to increase, suggesting this group is “generally waiting for higher prices before parting ways with their coins.”

Bitcoin: Supply Last Active 1yr+ Age Bands. Source: Glassnode

Meanwhile, the Long-Term Holder (LTH) Binary Spending Indicator has been declining over the last few weeks, suggesting decreased distribution pressure.

“As of the last few weeks, however, this distribution pressure has eased off markedly, giving the bulls more breathing room and less resistance overall.”

Bitcoin LTH spending binary indicator. Source: Glassnode

Glassnode analysts also observed that a local divergence was starting to develop between LTH and STH Supply, adding “weight to the case that there is a cooling off of distribution pressure across mature investors.”

Macro resets

Bitcoin’s price recovery from the $56,500 low appears to have reset the price valuations and investor expectations on a longer-term market outlook based on various criteria. According to the Glassnode report, key on-chain metrics have rebalanced, suggesting a massive upside movement for BTC.

The firm’s on-chain data reveals that while new capital flowing into the Bitcoin network has slowed down considerably from its all-time highs, its realized cap is still positive enough to stimulate price action.

“This metric remains in positive profit-dominated territory and is returning towards an equilibrium position. However, with declining sell-side headwinds from mature investors, this wave of modest demand has been enough to stimulate price action.”

Bitcoin net realized profit and loss. Source: Glassnode

Using the Sell-Side Risk metric to monitor volatility, Glassnode analysts evaluated the total value locked in by coins spent on-chain (Realized Profit + Realized Loss) in relation to the size of the asset class (Realized Cap). They found that the Sell-Side Risk Ratio has declined significantly over recent weeks, suggesting that the market has found a degree of equilibrium over the course of this correction.

Glassnode concludes that while an intense period of mature investor distribution followed Bitcoin’s run toward the $73,835 all-time high, sell-side pressure has markedly declined.

Bitcoin sell-side risk ratio. Source: Glassnode

The report noted that “this has led to a reduction in headwinds and overhead resistance, with even modest demand able to stimulate positive price action.”

Bitcoin price has strong underlying support

Bitcoin’s May 1 flash crash to $56,500 was followed by a sharp recovery above $60,000, a level it has held above since then. Popular trader and analyst, Daan Crypto Trades said,

“Bitcoin’s monthly chart is pretty clean. It is getting close to engulfing last month’s candle. It also held the key area around the ~$60K region, which marked the highest monthly candle closes at the last 2021 cycle top(s).”

Data from on-chain data provider IntoTheBlock reinforced the importance of this level. Its In/Out of the Money Around Price (IOMAP) model showed that two significant support lines sat above the $60,000 mark. They lay between the $61,553 and $67,860 price range, where approximately 1.5 million BTC were previously bought by 3.66 million addresses.

Bitcoin IOMAP chart. Source: IntoTheBlock

This demand area is robust enough to produce the buying pressure required to push the price higher.

Another analyst Ali Martinez shared the following chart in the X social platform showing MVRV Pricing Bands and said,

“If #Bitcoin continues to trade above $65,125, the next local $BTC top before a brief correction could be around $77,593!”

Bitcoin MVRV extreme deviation pricing bands. Source Glassnode