Bitcoin’s price is poised for a significant movement soon, according to onchain analysts, after a period of unusually low volatility. In a recent newsletter, lead Glassnode analyst James Check highlighted the Sell-Side Risk Ratio for Short-term Holders, which is rapidly decreasing, indicating a lack of new price activity in the market. This suggests that Bitcoin is primed for a breakout after a period of consolidation.
The Sell-Side Risk Ratio compares traders’ cumulative realized profits and losses to Bitcoin’s realized cap, showing whether traders have taken profits or losses at current prices. When this ratio is low, it indicates that the market is approaching equilibrium and a significant price movement may be on the horizon.
While the indicator doesn’t predict whether the price will move up or down, Glassnode’s weekly report mentioned that many short-term holders have accumulated coins near the current price, making the market sensitive to volatile fluctuations in either direction. Despite this, Bitcoin’s price saw an increase on Tuesday, rising to $71,000.
However, analysts caution investors to keep an eye on macro events, particularly in the bond market, which could cause downside volatility in the near future. With sticky inflation expectations in the US pushing the Federal Reserve towards a prolonged period of higher interest rates, bond prices may drop further, reducing investor risk appetite across the board.
Check emphasized the importance of monitoring the bond market, as it has the power to impact risk assets and financial stability. If yields increase significantly, it could lead to a volatile and uncertain market environment. Investors are advised to stay informed and cautious as they navigate the potential risks and opportunities in the current market climate.