The Bitcoin price is up 40% year-to-date (YTD) and has recaptured the $23,000 level. However, with ongoing concerns around DCG and Grayscale as well as macroeconomic uncertainties, many investors doubt the sustainability of the recent price rally.
With higher prices, motivation among investors may be increasing to use the current price level to exit and gain liquidity, especially after the long and painful bear market in 2022, as Glassnode discusses in its report.
The renowned on-chain analysis firm examines in its newest research whether Bitcoin’s recent bounce above the price it has last seen before the FTX collapse is a bull trap or if indeed a new bull run is on the horizon.
Bitcoin On-Chain-Data Suggests
Glassnode notes in its report that the recent price spike in the $21,000-$23,000 region has resulted in the reclamation of several on-chain price models, which has historically meant a “psychological shift in holder behavior patterns.”
The company takes a look at the Investor Price and Delta Price, noting that in the 2018-2019 bear market, prices stayed within the confines of the Investor-Delta price band for a similar amount of time (78 days) as they currently do (76 days).
“This suggests an equivalency in durational pain across the darkest phase of both bear markets,” Glassnodes states.
In addition to the duration component of the bottoming phase, Glassnode also points to the compression of the investor delta price range as an indicator of the intensity of market undervaluation. “Considering the current price and compression value, a similar confirmation signal will be triggered when the market price reclaims $28.3k.”
Regarding the sustainability of the current move, the analysis notes that the recent rally has been accompanied by a sudden increase in the percentage of supply in profit, rising from 55% to over 67%.
This sudden increase in 14 days was one of the strongest swings in profitability compared to previous bear markets (+10.6% in 2015 and 8.3% in 2019), which is a bullish signal for Bitcoin.
Following last year’s capitulation events, when a majority of investors were pushed into a loss, the market has now transitioned to a “regime of profit dominance,” which Glassnode says is “a promising sign of healing after the strong deleveraging pressure in the second half of 2022.”
Less bullish, however, is the selling pressure from Bitcoin short-term holders (STHs),…