Researchers at Glassnode looked at how the actions of Bitcoin holders with a shorter time horizon might trigger market shifts.
A subset of Bitcoin investors known as short-term holders (STH)—those who purchased the cryptocurrency within the past 155 days—became the most vocal in their desire to sell as the price fell from its March highs. According to experts at Glassnode, the actions of this subset of investors during consolidations and corrections can indicate the start of a market reversal due to Seller Exhaustion.
When most sellers have sold their assets to exit the position, the market is oversold and the seller exhaustion has set in. This lowers the amount of assets available on the market, which in turn lowers the price pressure. Thus, a regional floor for the asset price is created.
The experts at Glassnode calculated this effect by looking at the realized losses of short-term holders across age groups using on-chain metrics like MVRV and SOPR. In a bull market, these metrics, when combined, match up nicely with the formation of local minimums, according to Glassnode.
An important metric for determining the highs and lows of cryptocurrency market cycles, the MVRV Z-Score, has stayed mostly unchanged. If the MVRV Z-Score (green line in the chart below) gets very high, it might indicate that the market is about to make a turn.
The present value of the Bitcoin MVRV indicator suggests that the price may be consolidating within the current bullish trend and may have formed a local bottom.
Experts at QCP Capital, a trading firm based in Singapore, anticipate that Bitcoin’s price will retrace to its March high of $74,000, following a surge in several risky assets caused by the most recent release of the US consumer price index.
In a Bloomberg interview, Mike Novogratz, CEO of Galaxy Digital, the biggest cryptocurrency investment firm, agreed that the market is currently experiencing consolidation until something changes that cause it to grow. He predicts that Bitcoin will trade between $55,000 and $75,000.