Glossnode Reveals the Primary Conditions for Bitcoin’s Sustained Rally! “Difficult for Now!”

Bitcoin (BTC) is unable to escape its downward trend. Sudden increases in Bitcoin’s price are not sustainable due to insufficient buying liquidity.

At this point, on-chain analytics firm Glassnode has identified key metrics that will determine the next phase of BTC price growth.

Glassnode, in its analysis shared from account X, stated that after Bitcoin maintained its support range between $80,700 and $83,400 in recent weeks, the market’s attention has shifted to liquidity.

At this point, Glassnode stated that a more meaningful trend reversal and uptrend in Bitcoin first requires a recovery in market liquidity.

Glassnode stated that for a sustainable upward trend, the profit/loss ratio must remain above a certain level of its 90-day moving average.

Drawing on historical data, Glassnode stated that strong price recoveries, including mid-cycle rebounds in the last two years, only occurred when the profit/loss ratio remained above 5.

Because a ratio above 5 indicates consistently renewed liquidity inflows for Bitcoin and a return of capital to Bitcoin.

However, currently this rate is well below 5, at around 2.

Glassnode has identified that, in addition to insufficient liquidity, the supply structure of Bitcoin is also a source of pressure. Glassnode estimates that approximately 22% of the circulating Bitcoin supply is at a loss, a level similar to the correction phases seen in the first quarter of 2022 and the second quarter of 2018.

According to analysts, this increases the risk of a correction and could reignite selling pressure if Bitcoin fails to hold key support levels.

However, the selling pressure appears to be short-term and limited. According to a CryptoQuant analyst, the fact that Binance Bitcoin inflows remain at historically low levels suggests that investors are preferring to hold rather than sell.

While there is a risk of a short-term pullback, the analyst emphasizes that this risk and decline are limited, and a sustained improvement in liquidity indicators is necessary for a full-blown uptrend.

*This is not investment advice.

Continue Reading: Glossnode Reveals the Primary Conditions for Bitcoin’s Sustained Rally! “Difficult for Now!”