Several on-chain indicators have entered the so-called “risk zone”, which may be a signal of the initial stage of a bull market. Glassnode came to this conclusion.
The analysis is based on a group of indicators that take into account a wide range of data and categories of investor behavior. The combination of the two often gives a more complete picture of the market. It covers both short-term and long-term cycles.
The chart below shows them as a heat map of varying degrees of risk over the past five years. It demonstrates a significant coincidence of metrics and significant price extremes.
According to experts, a high risk indicator is usually observed in the early stages of a Bitcoin bull market. It means the hodlers return to a “significant level” of profitability, which can push them to start taking profits.
ETF news eases overheating
In particular, the MVRV indicator has approached this critical zone in relation to long-term investors. Such a high value (2.06) has not been observed since the collapse of FTX.
A similar status of “high” and “very high” risk is currently typical for six of the remaining nine metrics. This means a relatively low level of realized profit, given the active price growth in recent weeks, experts explained.
Moderate “unloading” of coins by hodlers after the approval of spot Bitcoin ETFs brought their spending rate away from the “risk zone.”
On February 11, the price of the first cryptocurrency consolidated above $48,000. The continuation of positive dynamics coincided with an increase in net inflows into exchange-traded funds based on digital gold to a record $541.46 million (February 9). The volume of assets under management of products reached $32.4 billion.
The improvement in dynamics was made possible, among other things, by reducing the outflow from GBTC to the minimum values since the registration of the ETF - $51.81 million.
$50,000 Resistance
In a commentary to ForkLog, trader Artem Zvezdin noted the completion of sales in early February upon the approval of the ETF. The expert sees in the current dynamics the return of institutional investors, who are increasing the share of risk in their portfolios in anticipation of the Federal Reserve lowering the key rate.
“If Bitcoin does not consolidate above the psychological level of $50,000 in the coming week, we can expect a small technical correction in the range of $44,000-45,000 and subsequent growth. The main factor will be the expectation of [changes in] Federal Reserve policy and halving. In my opinion, the first cryptocurrency this year will no longer fall below $40,000. In the coming months, we can expect an increase in quotes to $60,000,” Zvezdin wrote.
Keith Alan, co-founder and CEO of Material Indicators, also pointed out resistance near $50,000. He cited order volumes and pointed to the unfavorable reward/risk profile for short-term buyers at current levels. The specialist emphasized the lack of changes in positive expectations for hodlers.
