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Glassnode Key Indicators Signal Bitcoin’s Entry into High-Risk Territory
- Bitcoin reached a new all-time high overnight but faces extreme volatility, dropping to USD $68,854 (AUD $104,664).
- Analysts at glassnode indicate that the risk in the Bitcoin market is still very high based on 9 out of 10 metrics.
- The MVRV and Mayer Multiple models have signalled very high risk due to prices being well above long-term averages.
- A significant portion of Bitcoin supply is in profit, with 99.3% indicating a very high risk of selling pressure.
While Bitcoin has seen a new all-time high of USD $73,750 (AUD $112,375) overnight, the number one crypto is also facing extreme volatility as it temporarily dropped down to USD $68,854 (AUD $104,664).
Related: Market Analysis: On the Radar – Coins to Watch
According to glassnode, the pain for BTC may be far from over, with 9 out of 10 risk metrics displaying very high-risk signals.
MVRV and Mayer Multiple Pricing Models
Glassnode said both models have signalled a very high risk over the past 12 days, showing that prices are significantly higher than these long-term benchmarks, with the Mayer Multiple indicating an extreme deviation from its average.
The MVRV and Mayer Multiple pricing models are tools used to understand price trends in relation to long-term averages. The MVRV model compares the current price to the market’s average cost, while the Mayer Multiple focuses on how the price stands in relation to the 200-day simple moving average, indicating if it’s at a premium or discount.
Supply Profitability State
Presently, with 99.3% of the supply in profit, this indicator suggests a very high risk of selling pressure, a situation first observed 94 days ago in the current cycle, glassnode said.
The Percent of Supply in Profit (PSIP) metric calculates the percentage of coins that were bought at a price lower than the current market price, highlighting the chance of sellers cashing in as their holdings increase in value.
Net Unrealized Profit/Loss (NUPL) and Realised Profit/Loss (RPLR)
The Net Unrealised Profit/Loss (NUPL) and Realised Profit/Loss (RPLR) indicators offer insights into market sentiment and potential price movements.
NUPL, with a value of 0.64, indicates a phase of Euphoria, suggesting that the market is in a Very High-Risk state of greed, having surpassed the standard deviation threshold of approximately 0.59. This condition emerged 15 days ago, marking a shorter duration of heightened risk compared to past rallies.
On the other hand, RPLR stands at 41.7, well above the high-risk benchmark of 9. This indicates that over 97% of Bitcoin transactions were profitable, potentially signalling a peak in market demand. Historically, such spikes into the Very High-Risk category have been precursors to the formation of local price tops.
Related: Galaxy’s Novogratz: Bitcoin to Stay Above $50K, Bid Farewell to Lows
Additionally, the Long-Term Holder Spending Binary Indicator shows an increased spending rate among these holders, starting 11 days ago, potentially affecting supply.
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
