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Bitcoin Enters High-Risk Zone Signal for New All-time High

Glassnode has identified multiple on-chain indicators as residing in the very high risk zone.

Mon, 12 Feb 2024, 09:40 am UTC

Crypto analysis platform Glassnode has raised concerns about several on-chain indicators assessing the value of Bitcoin (BTC), suggesting that the cryptocurrency may be entering the initial phases of a bull market.

On-Chain Indicators Point to Elevated Risk Levels

According to Glassnode's Feb. 10 report, an indicator tracking Bitcoin's long-term valuation relative to its market value has surpassed the "mid-risk" zone and entered the "high-risk" territory.

This elevation in risk levels typically occurs at the bull market's start, indicating that long-term investors have returned to a "meaningful level" of profitability.

The long-term holder market value to realized value (MVRV) indicator plays a pivotal role in identifying whether Bitcoin is overvalued or undervalued compared to its fair value.

Glassnode has assigned a "high" or "very high" risk rating to seven out of ten indicators, including MVRV, Supply Profitability State, and net unrealized profit-loss. Despite significant increases in cryptocurrency asset prices, these indicators suggest very low levels of realized profit locked in by investors.

Bitcoin's Recent Performance and Market Dynamics

According to CoinGecko, the price of Bitcoin has shown steady growth over the past week, rising from $42,317 on Feb. 4 to $48,582 at the time of writing.

According to Coin Telegraph, this upward trajectory has been attributed to diminishing outflows from the Grayscale Bitcoin Trust (GBTC), which has been converted into an ETF, and substantial inflows into spot Bitcoin ETFs since their launch on Jan. 11.

According to Glass Node, the spot Bitcoin ETFs in the United States witnessed a net inflow of $541 million on Feb. 9, marking the most significant daily inflow for these products. In contrast, Grayscale's GBTC experienced its lowest daily outflow on the same day, signaling a notable decrease in investor selling pressure.

Glassnode's assessment of on-chain indicators suggests heightened risk levels for Bitcoin, possibly indicating the early stages of a bull market. This assessment aligns with Bitcoin's recent price performance and market dynamics, driven by factors such as ETF conversions and substantial inflows into spot Bitcoin ETFs.

Photo: Drawkit Illustrations/Unsplash

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