Bitcoin Market Experiences a Cool Down, Large Move Expected

Bitcoin
Market
Settling
Down

According
to
a
recent

report
by
Glassnode,
Bitcoin
markets
have
experienced
a
cool
down
after
several
months
of
intense
distribution
pressure.
This
comes
after
a
significant
period
of
distribution
into
the
All-Time
High
(ATH).
Despite
the
lighter
sell-side
activity,
capital
inflows
remain
relatively
modest.
However,
the
compression
of
volatility
could
suggest
a
bigger
move
on
the
horizon.

Supply
Side
Slows
Down

Strong
Bitcoin
markets
naturally
attract
sell-side
pressure
as
higher
prices
motivate
long-term
holders
to
distribute
some
portion
of
their
holdings.
However,
the
supply
held
by
the
3y+
cohort
continues
to
increase,
suggesting
this
cohort
are
generally
waiting
for
higher
prices
before
parting
ways
with
their
coins.
As
of
the
time
of
writing,
more
than
half
of
the
Bitcoin
coin
supply
hasn’t
transacted
onchain
in
the
last
2yrs
or
more.

Tracking
Top
Heaviness

The
report
also
leverages
the
URPD
metric
to
assess
the
density
of
coins
with
a
cost
basis
around
the
current
spot
price.
With
a
considerable
~15.9%
of
the
coin
supply
held
just
below
the
current
spot
price,
a
sustained
inflow
of
demand
could
potentially
catalyze
a
period
of
price
discovery.
Only
1.1%
of
the
circulating
supply
remains
above
the
current
spot
price.

Volatility
Compression

With
a
lightening
up
of
supply-side
pressure
and
capital
inflows,
the
market
has
turned
towards
volatility
tools
to
ground
expectations
for
the
next
move.
Volatility
continues
to
compress
to
levels
typically
seen
after
lengthy
consolidations
and
prior
to
large
market
moves.

Summary
and
Conclusions

Following
an
intense
period
of
mature
investor
distribution
into
the
$73K
ATH,
sell-side
pressure
has
markedly
declined.
This
has
led
to
a
reduction
in
headwinds
and
overhead
resistance,
with
even
only
modest
demand
able
to
stimulate
positive
price
action.
Alongside
this,
volatility
continues
to
compress
across
longer
timeframes,
while
a
dense
cluster
of
supply
has
formed
below
the
current
spot
price,
potentially
providing
a
robust
foundation
to
build
upon.

Image
source:
Shutterstock

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