BTC Needs to Dip to $19.3K to Cool Profit-Taking: New Data
• Data from Glassnode reveals that Bitcoin (BTC) may need to dip below $20,000 in order to reset a key metric related to speculative profit-taking.
• The market value to realized value (MVRV) metric shows that short-term holders (STHs) have become active, possibly dictating BTC price resistance.
• For STHs to take profits, the market would need to return back down to $19,300, thus creating a magnetic target for profitability and incentive not to sell.
Short-Term Holders Affecting Bitcoin Price
Data from analytics firm Glassnode reveals that Bitcoin (BTC) may need to drop below $20,000 in order to reset a key metric related to speculative profit-taking. The market value to realized value (MVRV) metric shows that short-term holders (STHs), those holding coins for 155 days or less, have become active and may be dictating BTC price resistance.
Profitability Influences Resistance Levels
As BTC/USD climbed toward $25,000 earlier this month, STHs began seeing substantial returns on their investment. This caused the MVRV metric to pass 1.2 on its way up and signalled the rejection of $23,800 as an area of BTC price resistance. For STHs to take profits without causing too much disruption for the market, Glassnode suggests that prices should return back down towards $19,300 – returning the MVRV back down towards 1.0 – as this provides an incentive not to sell whilst also offering a profitable exit point for those looking take profits now.
Whale Activity Also Being Monitored
Glassnode is also monitoring long-term holder cost basis and whale activity since the end of Bitcoin’s last bear market in late 2018. With these investors often acting as stabilisers during bearish markets and providing buoyancy during bullish ones it is important that we understand their behaviour in order for us make more informed decisions about our own investments into Bitcoin or other cryptocurrencies in general.
In summary then it appears clear that if STHs are indeed influencing current levels of support and resistance across the market then we could see prices falling back down towards $19,300 before they can rise up again beyond all time highs above $25k mark once more; something which will no doubt be welcomed by those already invested but perhaps prove too risky an entry point for some others who are yet undecided when it comes investing into cryptocurrency markets just yet.