Bitcoin [BTC], the largest cryptocurrency, continues to struggle around the $ 21k line. As of press time, BTC has undergone a fresh 5% correction by trading at $ 21.1k. Well, this is the first half of the story.
The second half of this story tells a different picture. In this case, the $ 20,000 level created “extreme demand” for BTC, thus creating new support levels.
Does BTC rise from the ashes?
The latest newsletter of the OnChain Week published analyst firm Glassnode discussed the change in momentum as the worst of sales could be made. However, the market still needed time to heal those “wounds”.
#Bitcoin attempted to escape the gravity of the $ 20k zone in a long-awaited relief rally.
Short-term momentum is favorable, however longer-term indicators suggest that it may take longer to form a solid foundation.
Read our analysis 👇https://t.co/Oi0IykvUNn
– glassnode (@glassnode) July 25, 2022
The on-chain metric of holder supply concentration paints a rather interesting prospect. One in which the short-term holders showed a “surprising” positive narrative.
Here the analysis plotted long-term versus short-term holders (and exchanges) and measured each group by their “Unexpended Realized Price Distribution”.
You might notice a greater distribution of unspent realized prices (URPDs) at $ 20,000 compared to other Bitcoin price levels, which was led by short-term holders, who also showed “high demand” at $ 30,000 and $. 40,000.
The chart indicated “extreme demand” around the region of $ 20,000. Also, note every psychological price level from $ 40,000 to $ 30,000 to $ 20,000 as it created a new group of STH. In this context, Glassnode added.
“It would be constructive to see these coins held by STH at the $ 40,000- $ 50,000 level begin to mature to LTH status in the coming weeks, helping to reinforce this argument.”
While this might be a good start for BTC holders, the cryptocurrency market is still recovering, especially for long-term holders.
Many long-term holders contributed to the sales side and to date URPD charts essentially represented the condition of “post-dust settling”.
These high-supply nodes could act as solid resistance as the market attempts to recover higher.
But patience would be the key here. This was the same duration that LTHs experienced during the bear market of 2018 looking at their past profitability.
In this case, LTHs have seen their recent profitability drop significantly below their annual performance for nearly 400 consecutive days. The decline reached a similar duration and depth to the 2018 bear market lows. Thus, providing added weight to the above arguments.
To sum up, Glassnode he has declared,
“The short-term momentum suggests a continuation of the recovery, provided that the realized price and the long-term holder realized price can maintain as a support level. In the longer term, the momentum suggests that the worst of the capitulation may be over, however a longer recovery time may be needed as the fundamental repair continues. “