Bitcoin Set for Strong Close to 2023, Glassnode Analysis Suggests


Bitcoin Set for Strong Close to 2023, Glassnode Analysis Suggests
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As 2023 nears its end, Bitcoin (BTC) looks set to wrap up the year in a similar position to how it started. Recent data suggests a promising uptrend for the world's most popular cryptocurrency. On-chain analytics firm Glassnode, in its latest weekly newsletter titled “The Week On-Chain,” released on October 24th, argued that the activities over the past week lay a solid foundation for a Bitcoin price uptrend.

Bitcoin’s recent price surge to $35,200 has caused quite a stir in the market. The cryptocurrency managed to surpass multiple key trendlines, including crucial moving averages, which had been acting as support levels for several months.

Among these, the standout is the 200-week simple moving average (MA) at $28,400, traditionally regarded as the "bear market" support line. Glassnode observed, “A cluster of long-term simple moving averages of price are located around $28k, and have provided market resistance through September and October”.

The report continued by highlighting that, “After a month of the market grinding higher, the bulls found sufficient strength this week to convincingly break through the 111-day, 200-day, and 200-week averages”.

Investor Profits See an Upward Tick

This bullish trend has had a significant impact on investor profitability. Several investor groups have seen an improved return on their investment. Notably, the so-called cost basis for both speculators and newcomers in the market is positioned around the $28,000 mark.

The report further elaborated on this, stating, “The Short-Term Holder (STH) cost basis is also now in the rear view mirror at $28k, putting the average recent investor into an average profit of +20%”. A critical tool to track the profitability of short-term holdings is the short-term holder market-value-to-realized-value (STH-MVRV) ratio.

Glassnode provided a chart of this ratio, which interestingly revealed that even before the optimistic October trends, there was no significant sign of panic selling or capitulation among investors. Highlighting the resilience of the market, the report pointed out, “We can see instances in 2021-22 where STH-MVRV reached relatively deep corrections of -20% or more.” Yet, this year's August sell-off, which bottomed out at -10%, was relatively mild in comparison, "suggesting the recent correction found noteworthy support, being a precursor to this week’s rally." With the cryptocurrency market notoriously unpredictable, such robust analyses provide essential insights into market trends and potential future movements.