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These On-Chain Benchmarks Reveal The Brief Interlude Of BTC Rally

Manoj Nair



BTC Rally

Bitcoin and the crypto sector had briefly seen some bullish trends but the BTC Rally has come to an end as the selling pressures have piled up. BTC prices have tanked by more than 12% in the past one week and is trading at $21,000.

A detailed analysis by On-chain data provider Glassnode clearly exposes the basic weakness in the short term BTC Rally. The brief rally was distinct with the absence of retail players. Also, the small transactions were all below $10,000. Data also reveals that when BTC price was rallying to $24.4K, the volume of small transactions were high and volumes for retail investors were still heading lower. This lack of retail involvement led to the fizzling out of the rally.

Linking Exchange Inflows and Outflows Of BTC Rally

On-chain data provider Glassnode explained the sea saw price flow of the BTC Rally which is intricately linked to USD-denominated inflows and outflows at the exchanges.

Glassnode revealed that Exchange flows tanking to late 2020 levels and a deficit of retail investor volumes reflects a lack of interest for speculative assets.

One thing is very evident -The lack of retail participation has precipitated a deficit in activity on the Bitcoin blockchain. Glassnode also points out that Net Realized Profit/Loss (90DMA) revealed that there is no fatigue in the sellers in the recent bear market. Comparing the last major bear cycles of 2018-2019, the Net Realized Profit/Loss (90DMA) should enter the neutral territory if there is to be any price recovery.

Short-term holders’ SOPR (90DMA) or the ratio between investors’ selling prices relative to their buying prices continues to hover at 1 and any breach above this benchmark is indicative of a reversal to profitable spending.

The crash of the crypto sector after reaching an all time high in November had crippled the short-term investors. This led to a sharp fall in the Short-Term Holders SOPR (90DMA) below 1. A period of very low conviction is heralded and the break-even values of 1 acts as a very strong resistance.

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