BTC price metric warns that Bitcoin speculators may sell past K
BTC price metric warns that Bitcoin speculators may sell past K

Bitcoin (BTC) could experience a “market correction” if BTC price moves well above $33,000, research warns.

In the latest issue of its weekly newsletter, The Week On-Chain, analyst firm Glassnode marked The risk of speculative selling is looming.

The average profit for a Bitcoin speculator is 12%

Bitcoin short-term holders (STHs) — the more speculative types of Bitcoin investors — are back in the spotlight this year.

More recently, their aggregated cost base appears to have formed broader BTC price support around $26,000. For Glassnode, which has observed the importance of the cost basis in recent weeks, the opposite effect may soon be on the horizon.

As part of its coverage of short- and long-term holder (LTH) activity, the researchers highlighted the level at which speculators should collectively profit.

It uses the Market Value Versus Realized Value (MVRV) metric, which divides the spot value of a coin by the price it last moved. The resulting number constitutes a measure of profit or loss, fluctuating around 1, corresponding to the “break-even” price.

“We can also see a strong reaction in the short-term holders MVRV indicator, reacting strongly at the breakeven level of MVRV = 1,” explained Week on Chain.

“The ratio is currently at 1.12, which suggests an average 12% profit for short-term holders.”

If the BTC price continues to rise, so will the STH-MVRV, and once it breaks above 1.2, the danger of historic profit-taking will become a reality.

Glassnode added: “When the indicator crosses levels between 1.2 (~$33,200) and 1.4 (~$38,700), the risk of a market correction tends to rise as investors take on bigger and bigger unrealized profits. “

Bitcoin short-term holders MVRV chart (screenshot). Source: Glassnode

$25,000 represents “seller burnout”

Further data reinforced the view that recent lows near $25,000 drove away those looking to sell.

Related: BTC Price Rising, Fundamentals Falling?5 Things to Know About Bitcoin This Week

The Spend Output Profit Ratio (SOPR), which measures the relative profitability of BTC moving on-chain, has repeatedly shown what Glassnode calls “exhaustion” among sellers at or near that level.

Exhaustion levels have been climbing since late 2022, after Bitcoin fell to multi-year lows following the FTX exchange crash.

Glassnode concluded in the corresponding chart: “In recent weeks, we have seen spot sellers exhausting below the lower bound several times, including a final low of $25,100 before recovering above $30,000.”

Bitcoin Spend Output Profit Ratio (SOPR) data (screenshot). Source: Glassnode

Magazine: Gary Gensler’s Job at Risk, BlackRock’s First Spot Bitcoin ETF, and Other News: Hodler’s Digest, June 11-17

This article does not contain investment advice or recommendations. Every investment and transaction involves risk, and readers should do their own research when making a decision.