Bitcoin Entering Volatile Correction Phase, Says Glassnode
The crypto analytics firm Glassnode suggests that Bitcoin (BTC) is now entering a phase of market correction and price volatility following its significant rally this year. According to key indicators analyzed by Glassnode, the recent surge in Bitcoin’s price has prompted holders to sell off for profits, leading to a potential correction in the market.
Key Indicators Point to Correction
Glassnode highlights two key indicators that suggest a correction in Bitcoin’s price:
- The Market-Value-to-Realized-Value (MVRV) indicator: This ratio compares Bitcoin’s market capitalization to its realized capitalization, which represents the value of all BTC at the prices they were purchased. When the MVRV indicator shows overvalued market conditions, it signals a possible correction.
- The Active-Value-to-Investor-Value (AVIV) Ratio: Similar to the realized price, this metric excludes inactive coins like those that have been lost. When Bitcoin’s price deviates significantly from the AVIV Ratio’s midpoint, it suggests an imminent correction.
Glassnode points out that both indicators are indicating potential corrections in Bitcoin’s price.
Long-Term Holder Supply and Realized Profits
Examining long-term holder supply and realized profits provides further insights into the current market situation:
- Long-term holder supply: Glassnode observes a decline in long-term holders selling off their Bitcoin at a substantial rate, which indicates profit-taking behavior.
- Realized profits: The analytics firm notes that realized profits have reached an all-time high of $3.5 billion per day. This means that $3.5 billion worth of inflows are required to acquire the new coins being sold by long-term holders.
These numbers highlight the significant profit-taking and selling pressure in the market, particularly in a post-ETF world where large sums of money are being invested in Bitcoin.
Expecting Resistance and Volatility
Glassnode suggests that Bitcoin is likely to encounter resistance and increased volatility in the near future:
“It makes sense for us to bump our head at this point, and we’re also moving into a more volatile period as seen in the AVIV ratio. Historically speaking, the market can go up quite sharply but then correct almost as sharply. This is evident in our MVRV and AVIV ratio. So just something to keep in mind and use as a frame of reference for where we are in the cycle.”
Bitcoin Price Update
At the time of writing, Bitcoin is trading at $67,672, reflecting a 7.5% increase in the last 24 hours.
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Hot Take: Bitcoin Correction Ahead
The recent rally in Bitcoin’s price has led to a period of correction and volatility, according to Glassnode. Key indicators such as the MVRV indicator and AVIV Ratio suggest overvalued market conditions and an imminent correction. Additionally, long-term holders are taking profits at a substantial rate, contributing to selling pressure in the market. As Bitcoin moves into a more volatile period, resistance is expected. Stay updated with Daily Hodl for the latest news and analysis on Bitcoin and the crypto market.
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