Bitcoin Is Due For a Massive Price Move: Onchain Analysts

Bitcoin’s price is poised for significant action following a prolonged period of low volatility, according to onchain analysis.

Bitcoin Price Move Incoming

In a Monday newsletter, Glassnode’s lead analyst, James Check, highlighted that the Sell-Side Risk Ratio for short-term holders is “dropping like a stone.” This indicator, a measure of trader behavior, suggests the market is eager for new price levels.

“Range contraction (consolidation) leads to range expansion (trending),” Check tweeted. “Bitcoin is coiled like a spring, and it usually doesn’t sit still like this for long.”

The Sell-Side Risk Ratio compares cumulative realized profits and losses of traders to Bitcoin’s “realized cap” – the total value of all bitcoins based on their last transaction.

When realized profit and loss are low relative to the realized cap, it indicates that traders have already taken profits or losses at current prices. Thus, price movement is necessary to stimulate further trading activity.

“This is an indicator that equilibrium is close to being reached, and signals we should expect a bigger price move is incoming,” Check explained.

However, the indicator does not predict whether the price movement will be upward or downward.

In Glassnode’s weekly report on Tuesday, the firm noted that many short-term holder coins have been accumulated close to the current spot price, which “introduces a risk of increased investor sensitivity to any volatile price fluctuations in either direction.”

Bitcoin’s price experienced some upside volatility on Tuesday, rising 3% to $71,000.

Watch The Bond Market

Despite bullish sentiment, Check advised investors to monitor macroeconomic events that could provoke downside volatility.

Specifically, persistent inflation expectations in the United States may push the Federal Reserve towards a “higher for longer” interest rate policy.

This scenario could lead to further declines in bond prices, reducing investor risk appetite, as US debt serves as universal collateral.

“The bond market is the one that gets to ‘call time’ on risk assets and financial stability,” Check noted. “Should yields accelerate higher from here, it starts getting close to the territory where things could get hairy, and fast.”