Bitcoin market not yet ‘heaviest’, but more consolidation expected: analysts

BTC prices have retreated below $70,000 during the Asian trading session on Wednesday morning, but markets are not yet overbought, according to analyst James Check.

“Right now, using a variety of volume metrics as input, BTC prices appear to be in line with fundamentals,” he said in a May 21 newsletter.

Moreover, the market appears to have done so by the end of 2020, he added.

In early December 2020, BTC prices rallied to regain their 2017 all-time high of $20,000. It consolidated around this level for a couple of weeks before climbing to a new high of $30,000 on New Year’s Day.

The #Bitcoin NVT pricing models are a kind of fair value model, imputing a price based on transaction performance.

Right now, using a variety of volume metrics as input, $BTC prices appear to be in line with fundamentals.

Looks like late 2020https://t.co/ZvplEcJEUM pic.twitter.com/ppkjjfmBml

— _Chess and checkmate 🟠🔑⚡☢️🛢️ (@_Escacmatey_) May 21, 2024

Rhyming story?

During this recent cycle, BTC prices have rallied to almost recapture their mid-March high of $73,738, but have encountered resistance there, indicating positive momentum and potential to enter price discovery territory.

“Only seven days in all of history have a closing price above that ($71,000), so we’re breathing very little here,” the analyst said.

He added that “achieving a convincing all-time high is rarely successful on the first try” before claiming that a period of “chopping wood” and a couple of significant tries is very normal.

Additionally, the network value to transaction (NVT) ratio suggests that bitcoin’s price is in line with its on-chain transaction performance, similar to conditions seen in late 2020.

Also, the short-term holder’s Spent Production Profit Ratio (SOPR) shows that the market is in an “enthusiastic” but not “euphoric” phase, indicating a potentially sustainable uptrend.

This is a condition where a significant number of holders are surprised and buy too many coins at too high a price.

The Glassnode analyst also mentions a “top” market condition, where a significant number of investors have losing assets. However, he notes that this condition has improved significantly, with only 6.6% of the supply of short-term holders now at a loss, reducing the risk of panic selling.

More Chopsolidation ahead

On May 21, fellow analyst “Rekt Capital” predicted that a weekly candle close above $71,500 would “likely prompt an exit from the re-accumulation range.” However, BTC prices had already dropped to $69,782 at the time of writing.

He added that history suggests that BTC should consolidate within this rally range for several more weeks.

#BTC

A weekly candle close above ~$71,500 would likely prompt an exit from the re-accumulation range

However, history suggests that Bitcoin should consolidate within this re-accumulation range for several more weeks

The extended consolidation here would bring Bitcoin closer to… pic.twitter.com/Af0W4MMBTN

— Rekt Capital (@rektcapital) May 21, 2024

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