Summary:
Bitcoin price is experiencing volatility compression, a sign of a potential sharp range expansion in the market.
Despite recent price declines, on-chain data reveals that Bitcoin investors remain remarkably profitable.
Bitcoin's True Market Mean (TMM) is at $50,000, which is a crucial level for the bull market to continue.
Volatility compression after prolonged consolidation periods typically precedes significant price movements.
The Sell-Side Risk Ratio has contracted to historic lows, suggesting heightened volatility expectations in the near future.
Bitcoin (BTC) has been experiencing a period of volatility compression, which often precedes sharp range expansions in the market. While the price has been slumping and sentiment is currently apathetic, on-chain metrics suggest that a larger move is brewing.
Glassnode, a market intelligence firm, points to the Market Value Realized Value (MVRV) ratio as an indicator of investor profitability. Despite the recent correction, Bitcoin investors remain remarkably profitable, with the average coin still holding a two-time profit multiple. This suggests a level often associated with the 'Enthusiastic' bull market phase.
Bitcoin's True Market Mean (TMM), which represents the average cost basis per active investor, is currently valued at $50,000. Glassnode believes that maintaining a price above this level is crucial for continued bull market momentum. However, a report by 10X Research suggests that if Bitcoin fails to hold above $60,000, it could swiftly drop to lower support levels, potentially reaching $50,000.
Volatility compression, characterized by a decrease in price fluctuations across multiple timeframes, often signals an impending large market move. The Realized Volatility across various timeframes has exhibited a negative 30-day change, indicating that volatility is compressing and investor expectations are aligning with lower volatility. This compression, particularly after extended consolidation periods, usually precedes significant price movements.
Furthermore, Bitcoin's Sell-Side Risk Ratio, which measures the balance of realized profit and loss locked in by investors, has contracted to historic lows. This suggests equilibrium within the current trading range and heightened volatility expectations. Overall, the current market conditions indicate that the next range expansion is likely nearing. This analysis is for informational purposes only and not investment advice.
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