Glassnode’s latest analysis suggests that the worst sell-offs may be over, but that the market will still need time to recover. “Extreme” demand at $20,000 for Bitcoin ( Bitcoin) seems to have forced the coins into the hands investors who care less price and created a new realized price level.
Glassnode’s UkuriaOC highlighted “extreme demand” in the $20,000 area in the latest The Week OnChain newsletter , published Monday. He noted that every psychological price level between $40,000 and $30,000 to $20,000 creates new short-term holders.
Glassnode analysts noted that a lot of the supply new STHs purchased during that drawdown have not been sold, even though prices are down. This could be because buyers are less price sensitive or people care more about Bitcoin’s fundamentals than investing gains.
The BTC price fell 55% between April and June from $40,000 to $18,100 according to CoinGecko.
Glassnode stated that these newly-minted STHs have more confidence in Bitcoin than price-sensitive buyers. He also suggested that they could be converted from a STH into a long-term holder. (LTH) A long-term holder is someone who doesn’t sell for at most 155 days.
“It would be beneficial to see these STH-held coins at the $40k-50K level mature to LTH status in coming weeks. This will help to strengthen this argument.”
Confirmed LTHs have been able to lock in almost 400 days of yearly profitability in this bear market. This is more than the 30-day profitability.
This is almost the same time period that LTHs had during the 2018 bear markets. Glassnode stated that this could indicate that LTHs are locking in losses. If the previous argument is true, it means that new buyers have lower price sensitivity than the group who sold. This could mean that they could become LTHs.
The report also notes that crypto companies have “unprecedented forcible selling” amid mass liquidations, bankruptcies and other circumstances. This created the conditions for a relief pump.
The report concludes that although the “worst moment of capitulation” may have passed, Bitcoin could still be in this range for some time because the cost basis for new buyers has diverged below realized price for just 17 consecutive days. The divergences have been low in previous bear cycles, which lasted between 248 to 575 days.
BTC has fallen 3.1% in the last 24 hours to trade at $21,146 as of the writing.