Bitcoin (BTC) is currently experiencing a classic correction phase following its recent all-time highs, according to the latest analysis from crypto analytics firm Glassnode. In its “Week Onchain” newsletter released on September 4, Glassnode pointed out that a significant price drop to approximately $104,000 could signal a shift toward seller exhaustion.
The report emphasized Bitcoin’s ongoing “post-euphoria consolidation” as it finds itself stuck in a volatile range, hovering between 10% and 15% below its all-time high recorded in August. Since reaching those heights, BTC has been in a significant downtrend, dipping to around $108,000 before recovering slightly to about $112,000. This fluctuating price action raises concerns over whether the cryptocurrency is entering a true bear market or merely experiencing temporary contractions.
To investigate this, Glassnode analyzed the active Bitcoin supply’s last movement, categorizing it into various profit “quantiles.” Notably, the 0.95 quantile, where 95% of supply is in profit, is essential for understanding current market dynamics. Presently, Bitcoin trades within the 0.85 to 0.95 quantile cost basis, estimated between $104,100 and $114,300. Historically, this range has acted as a consolidation corridor, often leading to sideways market movements following euphoric price peaks.
Breaking below the $104,100 threshold could indicate a recreation of prior exhaustion phases experienced in this market cycle. Conversely, if prices recover and push past $114,300, it could suggest that demand is regaining traction and establishing a more favorable trend.
The report also discussed the state of short-term holders (STHs), who typically hold Bitcoin for up to six months. Traditionally, this group supports price during corrections, but their profitability is shifting rapidly within the current price landscape. At its lowest, the profitability for STHs plummeted from over 90% to just 42% when BTC dipped to $108,000, representing a significant cooling from an overheated position to a more strained state.
This behavior indicates that STHs can react swiftly to changes in profitability, which can quickly lead to selling at a loss, thereby allowing the market to recover. The recent uptick from $108,000 back to approximately $112,000 exemplifies this trend and highlights the intricate dynamics at play in the Bitcoin market.
Investors are reminded that while these insights provide valuable context for the market, all trading and investment activities carry inherent risks, and thorough research is encouraged before making decisions.
