Bitcoin (BTC) price continues its post-halving retrace, which has seen the market transition into a regime of widespread net redistribution, causing the “euphoric phase” to cool off, according to a Glassnode report which identifies the cohort of investors driving the current sell-side activity. 

Bitcoin’s rally to $73,000 reactivated sell-side pressure

Bitcoin price has had an impressive run so far in 2024, with the flagship cryptocurrency breaching its all-time high on March 5. BTC has since corrected, consolidating within the $60,000 and $67,500 price range over the last two weeks.

Employing an Accumulation Trend Score, the market intelligence firm reported that BTC’s rise to all-time highs revealed local distribution patterns, mirroring similar structures seen in previous bull runs.

Glassnode analyst CryptoVizArt wrote,

“During the early stages of both the 2020-21 and 2023-24 bull runs, we can see a confluence between local regimes of distribution (light colors) and intervals of price contraction. As the market rallies to new highs, sell pressure is reactivated, as investors bring dormant supply back into the market to satisfy the inflowing demand.”

Glassnode explained that the Accumulation Trend Score intensified as geopolitical tensions in the Middle East escalated, causing a correction to $60,300.

BTC spot trading volume has soared since the spot Bitcoin ETFs began trading in the U.S. on Jan. 11, positively impacting the price momentum. Glassnode explains ETF impact on investor behavior using the Net Unrealized Profit and Loss (NUPL) metric.

The NUPL metric measures the magnitude of net paper profits (or losses) held by the market (normalized by the market cap).

Glassnode data shows that the NUPL has been greater than 0.5 for the last seven months, meaning the market is in a “classic euphoria phase of a bull market.”

“Using NUPL, we can identify the classic Euphoria phase of a bull market where unrealized profits surpass more than half the market capitalization size (NUPL > 0.5).”

Related: Bitcoin sub-$60K levels in focus after daily crypto liquidations near $300M

Short-term holders caused the latest correction, but seller exhaustion is comi

Due to high liquidity and the stalling flows into spot Bitcoin ETFs, the euphoria that backed Bitcoin’s yearly highs appears to be cooling off, fueled by selling by recent buyers. Bitcoin’s Realized Loss Breakdown metric reveals that short-term holders (STH) are dominating the market at the moment.

Glassnode expects the cost basis of younger age bands, 1-month to 3-month and 3-month to 6-month cohorts, to “emerge as valuable tools for distinguishing the bull and bear market structures.”

In terms of spot price action, this means recent buyers are more sensitive to short-term price movements and have a higher probability of spending in the short term as “the market starts to sell-off.”

As the market price approaches each sub-cohort's cost basis, their pace of spending can be anticipated to slow down, signaling seller exhaustion.

As such, the chances of the market experiencing seller exhaustion over the next few weeks are high since the cost basis of 1-week to 1-month holders is $66,700, while their realized loss has surpassed the 90-day level on multiple occasions since mid-March.

“Since the price resides within the $60k to $66.7k range, the MVRV condition is met, and it could be argued that the market is hammering out a local bottom formation.”

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