- Bitcoin’s rally from December lows after the FTX collapse surprised many investors, Glassnode says in its weekly report.
- Bitcoin could see further upside but a fresh buy signal is likely at prices around $28.3k.
- Selling pressure above $23.3k is more likely given short-term holders and miner push for exit liquidity.
Bitcoin price remains poised near $23,000 after a breakout pushed the leading cryptocurrency’s value above the psychological $20k level.
As highlighted ove the weekend, Bitcoin’s surge to prices above $23,000 did surprise many people, and while optimism is high among bulls, a potential liquidity exit from profit booking is likely. Particularly, this could be the outlook given how brutal the 2022 bear market was for short term holders and miners.
On-chain data platform Glassnode has highlighted this possibility.
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The recent market rally has pushed #Bitcoin prices above $23k, surprising many investors.
However, with higher prices comes an increased motivation for network participants to take exit liquidity, especially after the prolonged bear of 2022
Read here 👇https://t.co/D5QY9n5dp7
– glassnode (@glassnode) January 23, 2023
Glassnode’s outlook after latest BTC price action
According to on-chain data firm Glassnode, Bitcoin looks “almost out of the woods,” but the price action to levels in the $21k to $23k region also reclaimed several on-chain pricing models.
A look at the Investor Price (currently at $17.4k) and Delta Price ($11.4k), signifies a similar price action at the bear market bottom of 2018-2019. Investor Price is the average price at which investors acquired all the spent and miner distributed coins, while Delta Price is derived from Realized Cap minus Bitcoin’s all-time Average Cap to get a technical pricing model.
At the base of this outlook is the price discovery phase, which during that 2018 bear market bottom lasted 78 days. The current market is at a similar level, with BTC above the Realized Price of $19.7k.
“This suggests an equivalency in durational pain across the darkest phase of both bear markets,” Glassnode wrote in its weekly market report.
Still on the Investor Price/Delta Price metrics, the on-chain platform points to a measure called compression, which takes into account the spot price to determine the intensity of the market’s undervaluation. Â The metric also correlates with the scale of change in an asset’s Realized Cap or capital inflow volume, with a threshold zone of 0.15-0.2.
Given the current BTC price and compression value, Glassnode estimates a bullish confirmation signal could be triggered if Bitcoin bulls reclaim $28.3k.
More optimism for bulls
Also helping the bull case is the Supply in Profit measure, which spiked 12% in the last two weeks to rise from 55% to 67%. The spike in percent of coins in profit is “the sharpest” of all prior bear markets, suggesting a lot more coins changed hands below the $23.3k level.
Key to bulls’ case is also the fact that Bitcoin price at current levels is above all the three cost basis of long-term holder, short-term holder and BTC Realized Price. This is the first time spot price has pierced the three Realized Prices and sustained momentum above the levels would be positive.
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The recent surge in #Bitcoin price action has resulted in an initial breakout above all three cost-basis for the first time since the 2018/19 bear market and the March 2020 Covid crisis.
A sustained duration above these key psychological levels would be considered constructive. pic.twitter.com/kyzuwSPenv
– glassnode (@glassnode) January 24, 2023
A bull trap case
While Glassnode points to potential bull case scenarios, its report also highlights probable cases of fresh sell-off pressure.
According to the on-chain data report, one of these is the “substantial spike in profitability,” which the platform says raises the possibility of selling pressure triggered by short-term holders.Â
Miners are also likely to be motivated by the price action and might look to liquidate some of their holdings, adding to a potential retreat for BTC price.