As per a latest report by Glassnode, the Bitcoin market is now cooling off after several months of intensive distribution pressure. Even though actual FDI remains comparatively low, the shift in sell-side pressure coupled with reduced volatility increases the probability of a large shift on the horizon.
#Bitcoin markets have experienced a cool down after several months of intense distribution pressure.
Whilst capital inflows remain modest, the lightening of sell-side, and compression of volatility suggest a bigger move could be on the horizon.
Discover more in the latest Week… pic.twitter.com/VudlMGElPr
— glassnode (@glassnode) May 21, 2024
Realized Cap Indicates Slowdown in New Capital Inflows
In simple terms, high Bitcoin markets are prone to sell-side pressure, as high price levels trigger long-term holders to sell some of their crypto. This was in March and April when longer-term investors sold coins to meet new demand, therefore lowering Supply Last Active for 1 and 2 years.
However, the supply held by the investors that have held Bitcoin for over three years has been on the rise which suggests that they are willing to wait for higher price. According to current statistics, over 50% of all Bitcoins have not moved on-chain in the past two years.
The long-term holder binary spending indicator, which depicts the distribution pressure of HODLers, observed a significant reduction in LTH supply in March when Bitcoin hit the $73,000 mark. In recent years, this kind of distribution pressure has been greatly reduced, giving the market more room to move and less resistance.
On the other hand, the decline in LTH has been associated with a surge in the STHs supply, who are new entrants in the market. This relative difference between LTH and STH supply indicates the slowdown of the distribution pressure among the mature investors. The Liveliness metric also shows this change where the Bitcoin network is creating more coins by day than it is destroying.
Bitcoin Market Digests Recent Supply Distribution
On the demand side, the Realized Cap is a metric exclusive to on-chain analytics that denotes the aggregate USD-liquidity stored in Bitcoin. At present, it is estimated at $574 billion; the Realized Cap means that the pace with which new capital is flowing into developing countries has decelerated.
This is after the market had digested the latest supply which was distributed recently, with the daily rate of change of Realized Cap as indicator of capital inflows. Nevertheless, it remains a positive profit area market that is gradually shifting toward equilibrium.
Finally, the URPD metric, which measures the proximity of other coins to the current price, reveals strong support at slightly below the current spot price with 15. 9% of the total supply held at these prices. On the other hand, only 1. 1 % of the circulating supply is above the current spot price implying that there is a lot of upside for price discovery in case demand persists for an extended period.
