According to Glassnode, Bitcoin will likely continue range-bound trading for the time being as the demand side counters the sell-side pressure.
In its weekly on-chain newsletter, Glassnode noted that as the demand and supply sides established an equilibrium, Bitcoin was not positioned for upward growth. Instead, the price will continue to consolidate at current levels.
Bitcoin was trading at $65,056 on June 19 at 13:23 EST after a 0.6% increase in the last 24 hours, according to CoinMarketCap.
Bitcoin to Continue Sideways Price Movement
According to the Glassnode report, Bitcoin’s lack of significant price swings stems from “investor boredom and apathy.”
Despite Bitcoin crashing by 11% from its all-time highs established in March, investors are still sitting on profits. The report noted that over 87% of Bitcoin’s circulating supply is held in profit.
While some traders have taken profits after the recent rally to a new ATH, the demand side has remained strong. The increase in open interest at the Chicago Mercantile Exchange (CME), currently at $30B, shows high institutional interest. A high open interest could indicate institutions are optimistic about BTC’s future price movements.
However, this demand needs to be stronger to sustain the uptrend. For instance, flows into spot Bitcoin exchange-traded funds (ETFs) have slowed considerably. According to Farside, these products saw $152M in net outflows on June 18.
“Demand is sufficient to absorb the sell-side pressure but not large enough to push market prices higher,” the report said. “This suggests that the market structure is more beneficial for range traders and arbitrage strategies rather than directional and trend trading strategies.”
The reduced appetite for speculation has also affected BTC’s trading volumes. Data from CoinMarketCap shows Bitcoin’s trading volumes have plunged by over 30% in the last 24 hours. According to Glassnode, the lackluster volumes “echo a sentiment of boredom amongst investors.”
Bitcoin Traders Sit an Unrealized Profit of Around 120%
The report further analyzed trader profitability, noting that BTC holders have an unrealized profit of around 120%.
Trader profitability tends to affect exchange inflows and selling activity. As per the report, BTC on-chain inflows into exchanges have dropped significantly as traders become less speculative.
Despite healthy investor profitability, the magnitude of volume being processed and transferred on the #Bitcoin Network following the ATH has declined drastically. This underscores a reduced appetite for speculation and heightened indecision in the market. pic.twitter.com/0pmLweDRWS
— glassnode (@glassnode) June 19, 2024
Long-term holders are the least interested in selling, sending less than 0.006% of their stash into exchanges. This behavior indicates that holders are at an equilibrium and are awaiting an upswing or downtrend to stimulate their trading activity.
As the Bitcoin market stagnates, investors seek a decisive price movement, either upward or downward, to stimulate market activity.