On-chain analytics platform Glassnode has provided insight into why the Bitcoin price recently dropped below $70,000. The platform suggested that the flagship isn’t seeing enough demand yet, which could send the price to new highs.
Demand for Bitcoin is still modest
In one of the newest markets reportsGlassnode said that “the rate at which new capital flows into the Bitcoin network has slowed significantly from its peak.” They made this claim based on the Realized Cap metric, which measures the value of each Bitcoin based on the last time it was traded. Glass junction claimed that Bitcoin’s realized cap is currently $574 billion.
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The platform further revealed that the injection of liquidity into Bitcoin has cooled since the flagship crypto took off all-time high (ATH) of $73,750. This is in stark contrast to the period before Bitcoin hit that ATH, with Glassnode noting that flows into Bitcoin at the time were “extremely sharp, culminating in a value of $3.38 billion per day.”
Meanwhile, Glassnode stated that the Completed hood “remains in a profit-dominated area and returns to an equilibrium position.” However, they noted that modest demand for Bitcoin was still able to fuel this recent rally thanks to “decreasing sell-side headwinds from mature investors.”
In short, Glassnode suggested that things looked good for Bitcoin, but that things could be much better if there were more capital inflows. There could indeed be an increase in capital inflows soon enough, given that the Spot Bitcoin ETFs have broken their boundaries a series of net outflows and are recording again impressive net inflows in their funds.
Facts from Farside Investors shows that these funds have already seen almost $700 million in net inflows this week. Specifically, these Bitcoin ETFs recorded net inflows of $305.7 million on May 21 alone. It was that day too iShares Bitcoin Trust (IBIT) from BlackRock most profitable day to date, with the fund raising $290 million.
Some positive key points
Glassnode has also reviewed a number of others essential statistics in the chain, which provided some positives for Bitcoin’s future trajectory. The platform noted that there has been a “major drop” in Bitcoin’s sell risk ratio, which “suggests that the market is experiencing a degree of balance during this correction.”
To assess market volatility, they also measured the percentage range between the highest and lowest stock prices over the past 60 days. They concluded that “volatility continues to decline to levels normally observed thereafter long-term consolidations and prior to major market movements.”
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Meanwhile, Glasnode revealed that 2.14 million BTC was withdrawn from the Short-term holder (STH) the supply, currently 3.36 million BTC, fell into an unrealized loss after the recent market correction. They argue that this indicates that much of the BTC held by this category of investors is held at an unrealized loss, which reduces the risk of developing top-heaviness.
Featured image created with Dall.E, chart from Tradingview.com