As Bitcoin (BTC), currently priced at $30,528, continues its fluctuation, speculation about the cryptocurrency’s future trajectory remains key to price analysis. New research warns that if BTC price action surpasses the $33,000 mark, the market might see a correction.
Analytics firm Glassnode, in its latest weekly newsletter, The Week On-Chain, highlighted an impending risk of speculative selling as Bitcoin approaches this price.
Currently, the short-term holders (STHs) of Bitcoin, known to be the more speculative investors, are back in the spotlight. Their aggregate cost basis appears to be forming a broader BTC price support around $26,000. Glassnode, which has been observing the cost basis’ significance in recent weeks, warns of a potential reversal of this trend.
Analyzing both short-term and long-term holder (LTH) activity, researchers identified price points at which speculative investors are likely to realize their profits en masse. The market value to realized value (MVRV) metric, which compares the current value of coins against the price when they last moved, was used for this analysis.
The report explained: “This ratio is currently at 1.12, suggesting that, on average, the short-term holder cohort is sitting on a 12% profit.” If Bitcoin continues its bullish run, the STH-MVRV will increase accordingly. A value surpassing 1.2 indicates an increased risk of profit-taking, based on historical patterns.
Glassnode warns: “The risk of market corrections tends to rise when this metric exceeds levels of between 1.2 ($33.2k) and 1.4 ($38.7k), as investors come into increasingly large unrealized profits.”
Furthermore, data analysis suggests that recent lows close to $25,000 have caused sell-offs. The spent output profit ratio (SOPR), an indicator of the profitability of on-chain BTC movements, hints at seller “exhaustion” at or near this price level.
This trend of exhaustion levels has been on the rise since late 2022, following Bitcoin’s multiyear lows post the FTX exchange incident. Glassnode’s report states, “On multiple occasions in recent weeks, we can identify spot seller exhaustion taking place below the lower band, including the final low set at $25.1k before the recovery back above $30k.”