BTC struggled to overcome the level of $25,000, but on-chain analysis shows that the return to the major price level is partially the exit from the bear market.
An optimistic prospect for Bitcoin
BTC called BTC
trees are down
$20,441 in cash
traders seem to have lost in the first week of March as key on-chain metrics offered resistance.
Bitcoin is now threatening to retest the $22,000 level, and a wave of short sellers could profit if that happens. If the short sellers strike price is hit, some analysts believe Bitcoin could drop as low as $19,000.
A number of analysts are still projecting BTC to reach $25,000 in the short term, with on-chain data showing several reasons for price resistance at higher levels.
The obtained price metric determines how to take profits
The concerns of market participants about the Federal Reserve’s interest rate hike and higher inflation are major headwinds facing Bitcoin and this is for investors measuring the time value of money (TVM) . for BTC investment. To measure TVM on-chain, Bitcoin holders are grouped based on the length of time they have held BTC and the average cost of acquisition.
Investors who bought BTC in the past six months have benefited from early bear market conditions and have reached an estimated value of $21,000, putting them in the profits. The average market price for all BTC holders is $19,800, and we are currently making a profit.
Conversely, BTC held for more than six months has a higher value than other market groups at $23,500. When Bitcoin reaches above $23,500, holders who have seen a small TVM comeback for more than six months can put pressure on a breakout as they hunt for ants to close profits.
Liquidity inflows are increasing but not much compared to 2022
The price of Bitcoin actually responds to interest rates and the U.S. dollar. Dollar Index (DXY), which puts weight on risky assets. The negative impact of these is good for short sellers but bad for Bitcoin. The best way for Bitcoin to withstand the pressure of short sellers is to attract new long money and spot buyers into the market.
Analyzing net exchange flows is a good way to measure new investment and currently this metric shows a 34% increase from the beginning of 2023, but still lags behind the annual average of $1.6 billion.
Currently, the general consensus among analysts is that the ability to ride new money into the crypto market has been hampered by the abuse of banks supporting crypto-first businesses.
Bitcoin’s unrealized profit peaks reflect previous cycles
While some Bitcoin investors are seeing profits, positive signs of the on-chain appear when you look at the Net Unrealized Profit / Loss metric (NUPL). The NUPL metric reflects the difference between unrealized Bitcoin gains and unrealized losses in the BTC supply.
According to Glassnode, NUPL metrics as of March 6 show:
“Since mid-January, the weekly average of NUPL has changed from a negative position to a positive one. This suggests that the average Bitcoin owner currently holds an unrealized profit of about 15% of the market cap. This pattern looks like a market structure that fits the turning points in previous bear markets.”
Although Bitcoin’s 2023 momentum may have subsided in mid-February and there are still plenty of storms, there are positive signs that the exit of the deep phase of the bear market is imminent.