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Opportunity, or trap? Glassnode on Bitcoin price outlook

Bitcoin’s rally from December lows after the FTX collapse surprised many investors, Glassnode says in its weekly report. Bitcoin could see further upside but a fresh buy signal is likely at prices around $28.3k. Selling pressure above $23.3k is more likely given short-term holders and miner push for exit liquidity. Bitcoin price remains poised near […]

The post Opportunity, or trap? Glassnode on Bitcoin price outlook appeared first on CoinJournal.

  • Bitcoin’s rally from December lows after the FTX collapse surprised many investors, Glassnode says in its weekly report.
  • Bitcoin could see further upside but a fresh buy signal is likely at prices around $28.3k.
  • Selling pressure above $23.3k is more likely given short-term holders and miner push for exit liquidity.

Bitcoin price remains poised near $23,000 after a breakout pushed the leading cryptocurrency’s value above the psychological $20k level.

As highlighted ove the weekend, Bitcoin’s surge to prices above $23,000 did surprise many people, and while optimism is high among bulls, a potential liquidity exit from profit booking is likely. Particularly, this could be the outlook given how brutal the 2022 bear market was for short term holders and miners.

On-chain data platform Glassnode has highlighted this possibility.

Glassnode’s outlook after latest BTC price action

According to on-chain data firm Glassnode, Bitcoin looks “almost out of the woods,” but the price action to levels in the $21k to $23k region also reclaimed several on-chain pricing models.

A look at the Investor Price (currently at $17.4k) and Delta Price ($11.4k), signifies a similar price action at the bear market bottom of 2018-2019. Investor Price is the average price at which investors acquired all the spent and miner distributed coins, while Delta Price is derived from Realized Cap minus Bitcoin’s all-time Average Cap to get a technical pricing model.

At the base of this outlook is the price discovery phase, which during that 2018 bear market bottom lasted 78 days. The current market is at a similar level, with BTC above the Realized Price of $19.7k.

This suggests an equivalency in durational pain across the darkest phase of both bear markets,” Glassnode wrote in its weekly market report.

Still on the Investor Price/Delta Price metrics, the on-chain platform points to a measure called compression, which takes into account the spot price to determine the intensity of the market’s undervaluation.  The metric also correlates with the scale of change in an asset’s Realized Cap or capital inflow volume, with a threshold zone of 0.15-0.2.

Given the current BTC price and compression value, Glassnode estimates a bullish confirmation signal could be triggered if Bitcoin bulls reclaim $28.3k.

More optimism for bulls

Also helping the bull case is the Supply in Profit measure, which spiked 12% in the last two weeks to rise from 55% to 67%. The spike in percent of coins in profit is “the sharpest” of all prior bear markets, suggesting a lot more coins changed hands below the $23.3k level.

Key to bulls’ case is also the fact that Bitcoin price at current levels is above all the three cost basis of long-term holder, short-term holder and BTC Realized Price. This is the first time spot price has pierced the three Realized Prices and sustained momentum above the levels would be positive.

A bull trap case

While Glassnode points to potential bull case scenarios, its report also highlights probable cases of fresh sell-off pressure.

According to the on-chain data report, one of these is the “substantial spike in profitability,” which the platform says raises the possibility of selling pressure triggered by short-term holders. 

Miners are also likely to be motivated by the price action and might look to liquidate some of their holdings, adding to a potential retreat for BTC price.

The post Opportunity, or trap? Glassnode on Bitcoin price outlook appeared first on CoinJournal.

Source: CoinJournal: Latest Bitcoin, Ethereum & Crypto News

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4 bearish factors for Bitcoin this week

The Federal Reserve meeting scheduled on Wednesday may be hawkish for the dollar Bitcoin might give up some of its 2023 gains on a hawkish Fed All eyes are on the Fed’s view on inflation, growth, future interest rates, and quantitative tightening The Federal Reserve’s monetary policy decision is scheduled this week. It is the […]

The post 4 bearish factors for Bitcoin this week appeared first on CoinJournal.

  • The Federal Reserve meeting scheduled on Wednesday may be hawkish for the dollar
  • Bitcoin might give up some of its 2023 gains on a hawkish Fed
  • All eyes are on the Fed’s view on inflation, growth, future interest rates, and quantitative tightening

The Federal Reserve’s monetary policy decision is scheduled this week. It is the first time the FOMC (Federal Open Market Committee) meets in 2023, and the stakes are high for the US dollar.

Bitcoin has strengthened against the US dollar in January so far, in sync with other fiat currencies. Therefore, whatever the Fed decides on Wednesday will affect Bitcoin price too.

A hawkish Fed may turn up being bearish for Bitcoin. These are the four areas where the Fed may express its hawkishness: inflation outlook, growth outlook, interest rates level, and quantitative tightening.

Inflation outlook

The Fed is committed to bringing inflation to its 2% target. This is why it has raised rates so aggressively, so if the Fed says that inflation is embedded and upside risks remain, then the US dollar should move higher.

In this scenario, the market will bet that the Fed sees ongoing rate hikes as appropriate.

Growth outlook

The currency stance is that a sustained period of below-trend growth is likely. If the Fed changed its view and sees recession required to have a material impact on the inflation outlook, that would also trigger a sharp move higher in the dollar.

Interest rates

Ultimately, it is all about the interest rate level. The funds rate range has reached 4.25%-4.50%, and all eyes are on what the Fed does and says on Wednesday.

The base case scenario is that the Fed will hike by 25bp and says that ongoing interest rate increases are appropriate. Therefore, anything more than that should be bullish for the dollar and bearish for Bitcoin.

For example, the Fed might hike 50bp. This is a risk going into the meeting, especially considering that inflation is not backing down as fast as initially thought.

Quantitative tightening

The Fed currently shrinks the balance sheet at a pace of $95 billion/month. A decision to accelerate the balance sheet reduction would be very hawkish for the dollar.

The post 4 bearish factors for Bitcoin this week appeared first on CoinJournal.

Source: CoinJournal: Latest Bitcoin, Ethereum & Crypto News

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