The Bitcoin market has been consolidating for the past two months as indicated by sideways price action. However, on-chain analyst Will Clemente has pointed to some key levels that may signal market upside.
Short-term holders hold the key to Bitcoin momentum
In Blockware Solutions’ Intelligence newsletter this week, Clemente examined Bitcoin on-chain moves as well as derivatives market action.
On the on-chain side, the past week has not shown much change from last week. Bitcoin volume movements have clustered around the price range, of $36,000 to $45,000. Specifically, around 20% of Bitcoin’s money supply has moved in the price range, meaning that spot market premiums have persisted, he noted.
On the derivatives side, the market has also not been showing much “exuberance.” An indicator of this is the fact that the difference between the price of spot Bitcoin and three-month futures contracts, called quarterlies, has been cooling off.
The metric which acts like a “risk-free” yield indicator is pointing to the market needing a mega catalyst -such as Apple or Amazon announcing Bitcoin purchase – to reach a boiling point again.
However, the market may have some potential to rebound without outside influences, the analyst mused. From an on-chain supply dynamics perspective, there has been an uptick in illiquid supply on the back of Bitcoin exchange balances dropping.
This is potentially bullish for the market as indicated by on-chain data. Clemente pointed out that the exchange withdrawals, which majorly originated from Coinbase, have been finding their way to long-term holders (LTH) wallets which are less likely to sell.
Regardless, the metric that would completely tip the market back into undoubted bullish terrain would be a return of positive short-term holders’ realized price. The metric which currently sits at around $46,000, was at $53k when Bitcoin turned bearish.
Ultimately, to regain momentum I still look to short-term holder realized price (or cost basis) as the level that BTC needs to reclaim to regain momentum, Clemente said.
Bitcoin price has been rising steadily of late
While the analysis points to a tame Bitcoin market, the low tide may already be turning. Bitcoin is trading at around $41,600, up 2.44% in the last 24 hours at the time of writing.
The price has reached an intra-day high of $42,200 on the day, its highest level in over two weeks. According to speculations, the Bitcoin market is bound to make new highs as long as adoption continues increasing.