Glassnode’s on-chain metrics explain why Bitcoin is holding steady between $96K and $98K despite fears of a potential decline to $90K.
In a recent tweet, Glassnode emphasized the advantages of its Cost-Basis Distribution (CBD) model over traditional technical indicators when analyzing Bitcoin’s price behavior.
While conventional tools like moving averages track broad market trends, the CBD model offers a more precise view of investor actions by quantifying Bitcoin’s supply at specific price levels.
Bitcoin Finds Strong Support Between $96K and $98K
Traditional indicators like the 7-day Simple Moving Average (SMA) offer a general sense of market direction but often miss crucial price-specific details. For example, while the 7-day SMA is currently near $98,180, Glassnode points out that CBD data reveals 120,000 BTC were accumulated in the $96K to $98K range.
This robust accumulation highlights why this zone has become a stronger support level for Bitcoin. For context, Bitcoin recently experienced a flash crash to $94,300 but rebounded almost immediately back into the $97K range. Since then, the price has generally stayed between $96,000 and $98,000 for most of today.
Liquidity Gaps and Volatility Risks
The CBD model also helps identify liquidity gaps, which are essential for understanding potential price volatility. Glassnode’s 3-month view shows that Bitcoin’s supply below $96K is increasingly thinning, with a critical support level emerging around $87K.
As a result, the firm warns that if Bitcoin’s price drops below $96K, short-term price instability could rise sharply due to the lack of liquidity to absorb selling pressure.
This observation is further supported by data from IntoTheBlock which shows that Bitcoin is currently supported by 1.44 million addresses holding 1.47 million BTC, with an average purchase price of $97K.
Bitcoin holder clusters
This is the most significant support zone for BTC. Below this level, 403,510 addresses are holding 204,840 BTC purchased at an average price of $94K.
On the resistance side, 102,170 wallets are holding 101,270 BTC. The resistance becomes even more limited above this zone, with the next level showing only 10,001 wallets holding 28,180 BTC, bought at an average price of $98,720.
The Bottom Line
In essence, a Bitcoin price closing above $97,000 could signal a potential surge toward the $99K level. Conversely, a close near $96K could trigger a test of the $93K support, where further declines may follow due to the lack of strong support below.
This data emphasizes the importance of using on-chain metrics to gain a clearer understanding of Bitcoin’s market dynamics. It offers traders a more informed approach to navigating Bitcoin’s price movements beyond traditional technical analysis.
