- Since reaching $31,700, Bitcoin has been quietly preparing for a historic repeat.
- Short-term holders could soon be less profitable than their long-term counterparts.
In recent days, the crypto market has been led by Bitcoin [BTC], has been relatively quiet. And based on Glassnode’s on-chain newsletterthe perceived constraint reflects that of slow and steady liquidity, similar to the 2016 and 2019/2020 periods.
Read From Bitcoin [BTC] Price prediction 2023-2024
One area the on-chain analytic platform took into consideration when explaining the above was the realized limit. For context, the realized limit measures the estimated cost of acquiring Bitcoin compared to the last traded price.
Capital returns, bring compression
The Glassnode data went on to compare the realized limit in 2020 in 2022 to the current one. Prior to the aforementioned period, Bitcoin initially had massive capital outflows.
But the recovery started in March 2020. And later in 2021, there was a bull market where the realized cap increased by 348%.
Source: Glassnode
Like the 2020 incident, Bitcoin experienced a recovery in capital inflows after a massive withdrawal in 2022. So there could be a chance that another bull market wasn’t far off, but Glassnode was quick to mention that,
Recovery from realized cap ATH in previous cycles took between 95 and 239 days, with recovery occurring at a similar rate to date.
Another aspect that exposed BTC’s tight trading conditions was the range of the Bollinger Bands (BB). This range uses the standard period and standard deviations to determine whether prices are relatively high or low.
With a 4.2% difference between the upper and lower bands, Glassnode believed BTC was experiencing extreme pressure. In addition, it marks the quietest market the coin has had since January.
Source: Glassnode
It’s probably the preamble
Like the realized limit, Bitcoin’s seven-day net realized profit/loss was in a similar state to the first half (H1) of 2019 and 2020. The on-chain indicator shows whether the market is in profit or loss.
When the net realized profit/loss is less than zero, it means that the market is losing. While values above zero indicate a profitable market.
Glassnode’s analysis found that the metric made the market profitable. But the big deal was whatever it looked like leading up to the bull market between 2020 and 2021. Therefore, there is a chance that BTC could replicate the shape from then on.
Source: Glassnode
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When looking at the short-to-long-term SOPR ratio, on-chain data showed that spending by each cohort was close. However, the Short Term Holders (STH) still dominated slightly.
This was a similar trend to the March 2020 metric. And as such, STH could soon be less profitable than their long-term counterparts.
Source: Glassnode