Bitcoin (BTC) price is likely returning below $20,000 in order to reset a key metric around speculative profit-taking according to a report released by the analytics firm Glassnode.
Glassnode explained that the main driver likely to push Bitcoin to $19,300 is the emergence of numerous short-term holders whose profit-taking action is weakening the immediate resistance level.
According to Glassnode’s analysis, short-term holders (STHs) will eventually dictate BTC price resistance. It was gathered that as BTC/USD gravitated towards $25,000, STHs (who have been holding BTC for 155 days) have made substantial profits and are selling.
The above claim was justified by the market value to realized value (MVRV) metric, which juxtaposed the Bitcoin market cap to the value of coins moved on-chain.
Glassnode further explained that by comparing the two metrics (MVRV), one will be able to have a reliable understanding of when the price is above or below fair value to determine market profitability.
It added that the profitability of STHs taking profit is extremely high, especially when the average STH is 20%+ in profit.
However, Glassnode revealed that:
“Should the market return to $19,300, it would bring STH-MVRV back to the value of 1.0, and indicate that spot prices have returned to the cost basis of this cohort of new buyers.”
In the final analysis, $19,300 would serve as a magnet target in terms of profitability and incentive not to sell for STHs.
Bitcoin Enters Transitional Phase
While Bitcoin (BTC) is currently exchanging hands at $22,373 according to data from CoinMarketCap, there have been projections that reversal to macro lows is highly possible with $12K BTC price still in the offing.
On the contrary, Galaxy Digital Holdings CEO Mike Novogratz envisaged that the largest digital asset by market cap could hit $30,000 before the end of the first quarter of 2023 – which now appears not feasible.
Although BTC is still indecisive on the next line of action with little or no volatility in the past few days, the coast will clear in a matter of time.
