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.