Anchen’s analysis: Bitcoin price has entered the transition stage from the bear market

While Bitcoin’s upward trend seems to have stalled after the price failed to break through the $25,000 level about 2 weeks ago, a look at such data suggests that this price correction could be part of a transition from the market. be descending

According to Cointelegraph, the price of Bitcoin is now at risk of another breakout of the $22,000 level, which, if it happens, will cause a wave of short traders to profit. Some analysts believe that if Bitcoin reaches the price set by short traders, there is a possibility of falling to the $19,000 range.

A small number of analysts also predict that the price of Bitcoin can rise to $25,000 in the short term, citing such data that shows price resistance at higher levels.

Realized price index shows profit storage

The restraining effects of the Federal Reserve’s rate hike and high inflation in the United States on the price of Bitcoin have caused investors to calculate the time value of money (TVM) of their Bitcoin investments, along with raising concerns among market participants. The Time Value of Money Index divides investors into different groups based on the length of time they hold Bitcoins and the average cost of Bitcoins purchased.

Investors who bought Bitcoin over the past 6 months have benefited from the bearish market conditions in time, and the average realized price of $21,000 shows that they are in profit. The average realized market price for all Bitcoin investors is also $19,800, indicating that investors are currently in profit on average.

On the contrary, the realized price of the group that has invested in Bitcoin for more than 6 months is higher than the rest of the group and is in the range of $23,500. When the price of Bitcoin reaches above $23,500, this group of investors will see a slight return of the time value of their money, and their efforts to save profits will lead to pressure and a possible breakout.

Cash inflows increased, although lower than in 2022

Bitcoin price reacts strongly to interest rates and the US dollar index (DXY); Indicators that put pressure on the price of risky assets. The negative impact of these factors will benefit short traders, although it is bad for the price of Bitcoin. The best way for Bitcoin to withstand the pressure of short traders is to inject liquidity into long trades and the activity of spot buyers in the market.

Examining the net movement of capital in exchanges is a good way to measure the amount of new inflow liquidity. Currently, this index shows a 34% increase from the beginning of 2023, which, of course, is lower than the daily average of 1.6 billion dollars last year.

Currently, most analysts agree that the ability to inject new liquidity into the cryptocurrency market has been hampered by a crackdown on banks backing businesses in the industry.

Bitcoin’s increase in unrealized profit is similar to the pattern of previous cycles

While some Bitcoin investors are in the realized profit range, if we look at the Net Unrealized Profit and Loss (NUPL) index, we see positive signals. This indicator calculates the difference between unrealized profit and unrealized loss in the Bitcoin supply.

According to the Glassnod report, the net unrealized profit and loss index on March 6 (March 15) shows:

Since mid-January (late January), the weekly average of this index has changed from unrealized net loss to positive range. This indicator shows that currently, holders of about 15% of Bitcoin’s market capitalization are, on average, in unrealized net profit. This pattern resembles a structure similar to the transition phase in previous bearish periods.

While Bitcoin’s uptrend in 2023 may have stalled due to the pressure of inhibitory factors in mid-February (late Bahman), a review of such data points to positive signs that we are likely to break out of the bottom of the bear market soon.