The Bitcoin market has been sizzling hot lately, with prices surging to new all-time highs around $70,000. However, some analysts suggest a pause or correction could be on the horizon based on key on-chain metrics.
Lead analyst “Checkmate” from Glassnode recently tweeted a thread breaking down what the data is telling us. One key point is that investors are fundamentally motivated by profits, regardless of the asset. For Bitcoin, when the MVRV ratio (market value to realized value) reaches around +1 standard deviation, it has historically signaled several major market cycle peaks and corrections in the past.
The +1 standard deviation level currently sits at around $70,800. As Checkmate explains, “which represents a level where many investors see a sufficiently green portfolio to take some chips off the table.” Sure enough, we’ve already started seeing long-term Bitcoin holders distributing coins as the market approached the previous $69,000 all-time high.
In fact, long-term holders have spent around 735,000 BTC back into liquid circulation recently. Around 60% of this is estimated to be from the Grayscale Bitcoin Trust, while the remaining 40% is from individual long-term holders taking profits. This distributing behavior from HODLers is characterized as “one of the most reliable patterns in Bitcoin market cycles” by analysts.
Consequently, the Realized Profit metric for Bitcoin rallied to $3.9 billion per day as coins were revalued from lower cost bases to higher prices during the sell-off. While this reflects heavy selling pressure, it also indicates substantial capital inflows into the space.
Despite this distribution, Bitcoin has only corrected around 20% from its recent highs since the FTX collapse lows. As Checkmate states:
This speaks to one of the most robust, spot demand driven $BTC bull markets in history. Objectively one of the most robust, and least volatile uptrends in history.
Bitcoin Short-term Holder Accumulation
While long-term holders take profits, data is also showing newer, shorter-term holders comprising a significant portion of the market. According to CryptoQuant, short-term holders currently make up around 48% of Bitcoin’s Realized Capitalization. This reflects very high recent accumulation and bullish sentiment among newer market entrants. However, it also means any selling from this cohort could have an outsized price impact in the weeks ahead.
Overall, the cyclical holder behavior patterns remain strikingly consistent with prior cycles as BTC pushes into new all-time high territory. Many analysts suggest the market could be due for a healthy pause, correction, or consolidation period as it digests the latest run-up. As the old trading adage goes – sit tight and let the market cycles play out.
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