According to a recent report from Glassnode, the Bitcoin market is currently undergoing a period of cooling off after experiencing intense distribution pressure for several months. While the actual foreign direct investment (FDI) remains relatively low, the decrease in sell-side pressure and volatility suggests the possibility of a significant shift on the horizon.
In simpler terms, when Bitcoin markets are at high price levels, there is typically sell-side pressure as long-term holders sell some of their crypto. This was evident in March and April when long-term investors sold coins to meet new demand, resulting in a decrease in the supply of Bitcoin held for 1 and 2 years.
However, the supply held by investors who have held Bitcoin for over three years has been increasing, indicating that they are willing to wait for higher prices. Currently, more than 50% of all Bitcoins have not been moved on-chain in the past two years.
The long-term holder binary spending indicator, which measures the distribution pressure of long-term holders (HODLers), showed a significant reduction in supply in March when Bitcoin reached $73,000. In recent years, this distribution pressure has significantly decreased, allowing the market to have more flexibility and less resistance.
On the other hand, the decrease in long-term holder supply has been accompanied by an increase in supply from short-term holders (STHs), who are new participants in the market. This difference between long-term holder and short-term holder supply indicates a slowdown in distribution pressure among experienced investors. This change is also reflected in the Liveliness metric, which shows that the Bitcoin network is creating more coins than it is destroying.
On the demand side, the Realized Cap is a metric that measures the total USD-liquidity stored in Bitcoin through on-chain analytics. Currently, it is estimated to be $574 billion, indicating a deceleration in the rate at which new capital is flowing into the market.
This slowdown comes after the market absorbed the recent supply distribution, with the daily rate of change of Realized Cap serving as an indicator of capital inflows. However, the market remains in a positive profit area and is gradually moving towards equilibrium.
Finally, the URPD metric, which measures the proximity of other coins to the current price, shows strong support 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, suggesting potential upside for price discovery if demand continues for an extended period.
Tags: BTC
