Bitcoin Could Trade at $ 12,000 Soon – Glassnode Report

New reports from Glassnode reveal that the Bitcoin the price runs the risk of falling to trade around the $ 12,000 trading zone. In his new report, titled “The Great Detox”, he explains that due to the current price movement we are seeing in the market, he is putting pressure on market participants, from long-term holders (LTH) to miners, which could force to sell pressure that would see a further drop in its price.

“As global liquidity continues to evaporate, despite Bitcoin’s remarkable resilience in the face of the dollar bullish index (DXY), which is a measure of the strength of the US dollar, the token still risks losing value, as we have seen with other fiat currencies such as the British pound and the euro

Bitcoin’s price has so far remained limited to the range this week, trading between a high of $ 19,639 and a low of $ 18,309. However, price action is barely holding on to the consolidation range lows set in July, keeping abreast of what could be further capitulation, a capitulation that could see Bitcoin’s price trading at a level that doesn’t. has been trading since October 2020.

What you should know

In its analysis, Glassnode explored an on-chain metric called “New Entities Metric”, which is a measure of network adoption and captures the best estimate of the number of unique new entities that have transacted on the Bitcoin network. The metric revealed that approximately 83,500 new entities come online per day, which is a new macro low for the 2020-22 cycle. However, compared to the 2018 bear market low, it remains higher, reaching a minimum inflow of 66,500 new entities per day. This is an increase of 25.56%.

The metric also revealed that monthly network adoption has recently plummeted below the level set following the Great Miner Migration in May 2021, when China banned cryptocurrency mining in its country. This means that there is not yet an appreciable recovery and that there is an influx of new users in decline in the network.

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The report explored another metric, “the median transaction volume metric,” which shows the behavior of small transactions. The median transfer volume represents the “median package spend” and thus can be used as a proxy to represent small participation. Currently, this metric is on a downtrend, which means a decrease in retail market participation.

The report further explained that the structural decline in median transfer volume, albeit in a downward trend, appears to be about to gradually flatten out. This softening of the trend suggests that the market may enter a phase of relative stability, indicating that the network is close to a complete detox from speculative interest and is approaching a baseline of user equilibrium.

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Another metric on the chain explored is “Mining revenue from commissions.“This metric is directly related to the level of blockspace demand and thus to network congestion, which has historically been an important indicator for the macro market turnaround. Currently, the metric indicates that Bitcoin is in what it is called. a “silent low cost regime”, which means there is a lack of demand for block space, minimal network congestion, and a lackluster view when it comes to network participation.

On this, the report further stated that “It is clear that the Bitcoin network remains in an extended mute fee regime, further confirming that a recovery in demand is not yet underway. Network activity as a whole remains a barren wasteland, with the adoption of new entities falling below cyclical lows while a complete exodus of retail participation is more evident. “

The report also tracked the volumes of life destroyed in the network. The metric is often seen as synonymous with tracking “old smart money versus new and inexperienced money”. The metric incorporates both the age and volume of coins spent in an attempt to measure the amount of “stored time” spent.

The metric revealed that investors with older coins stand still and have refused to spend and exit their position on any significant scale. He further stated: “while this is constructive as it shows the conviction of the HODLers, with such a lackluster demand profile as a backdrop, that observation can best be interpreted as the HODLers taking refuge for the storms to come ”.

On the plus side, the report also revealed that Bitcoin held by mature coins is at an all-time high (ATH), due to the behavior of dominant investors refusing to spend despite extremely uncertain global markets. Therefore, almost all market activity is conducted by the same cohort of young coins, which change hands repeatedly. As the number of young coins producing coins decreases incrementally, it can lead to an eventual supply squeeze if and when the market tides change.

In the short term, Glassnode evaluated the coin distribution structure and in the short term Glassnode stated: “A large air gap is evident below $ 18,000 down to the $ 11-12,000 range. Trading below the low. of the current cycle would place an extraordinary volume of short-term holder currencies in a deep unrealized loss, which could exacerbate downward reflexivity and trigger another large-scale capitulation event ”.

A decline towards $ 12,000 is highly likely because short-term holders are responsible for the majority movement of the currencies, with a strong focus around the current market price and macroeconomic events. Due to the actions of policy makers in relation to restrictive monetary policies, we may see these short-term holders behaving irrationally as they will react bearishly to any news of a rise in interest rates, making the chances of an interest rate hike very likely. other capitulation.

On the plus side, as prices have fallen below $ 20,000, the market has so far responded with an opposite reaction, as there is an extended period of exceptionally low long-term holder coin spending, and indeed the Calmer from the 2018 bear market lows on a statistical basis.

On this, the report stated, “It is clear that owners who have held their Bitcoins during the volatility of the past year are simply not interested in selling at these price levels, having experienced the full spectrum of volatility and downside that Bitcoin is infamous for. It seems more and more. likely that the remaining Bitcoin HODLers are tied up and willing to go wherever the Bitcoin ship takes them.

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