Bitcoin (BTC) Capital Inflow Cooling Down, Expect Volatility, Glassnode Report Says

Capital inflow into Bitcoin (BTC), the largest cryptocurrency, drops to the “quiet” zone as excitement about the Bitcoin Spot ETF launch has cooled off completely. Normally, such phases happen prior to powerful volatility spikes, Glassnode experts say in the latest report.

Bitcoin ETF euphoria completely vanished, on-chain metrics say

As net capital inflow into Bitcoin (BTC) loses traction, a degree of equilibrium has been reached between investors taking profit and loss, the Glassnode team says in its latest “The Week On-Chain” report. The last days of August look particularly apathetic in this regard: 89% of days experience a capital inflow larger than today.

Amidst tumultuous market conditions as of late, Long-Term Holders have been locking in a reasonably consistent $138M in profit per day. With each transaction, a buyer and a seller are matched, with supply and demand imbalances resolved via price changes.

Therefore, we can infer… pic.twitter.com/tSAXvF9Rc1

— glassnode (@glassnode) August 23, 2024

Also, an insightful indicator of the MVRV Ratio suggests that investor profitability has essentially reset to equilibrium position and that the excitement and exuberance after the BTC ETF launch in the U.S. this January are not there anymore.

The Sell-Side Risk Ratio indicator also proves the “equilibrium” theory: the majority of coins is moved near its original acquisition price.

All of these metrics hint at volatility spikes coming for the largest cryptocurrency, researchers stressed:

With respect to historical preference, periods of quiet and calm market structure are short-lived and often precede an expectation for heightened volatility.

As of press time, Bitcoin (BTC) is trying to protect $61,500 level after being brutally rejected at $65,000 yesterday. However, only $29 million in positions have been erased in the last 24 hours, almost all longs.

Long-term holders not selling, even at loss

Selling pressure on Bitcoin (BTC) right now is mostly driven by short-term holders, while “HODLers” are maintaining their confidence, Glassnode research reveals.

Q2-Q3, 2024, were painful for newcomers. After setting the ATH in March, the confidence of new investors was tested by choppy sideways price action for several months. During this process, a significant volume of the Bitcoin supply has remained tightly held and is within the three-month to six-month age band.

Meanwhile, a notable share of supply held by new Bitcoiners is transitioning into long-term-holder status, having been held for at least 155 days.

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