The collapse of the bitcoin price from $ 58 thousand to $ 43 thousand zeroed the on-chain indicators of the cryptocurrency, paving the way for a new rally, according to Glassnode.
The fall in the price of bitcoin below $ 45 thousand is a positive signal for the cryptocurrency, since the market is thus getting rid of weak players. At least that’s what Glassnode analysts say.
In their weekly digest, the experts took a look at how the on-chain performance of bitcoin performed after a long rally. For example, the bitcoin adjusted spent output profit ratio (aSOPR) dropped below 1.0 for the first time in 2021, reaching 0.988.
When the ratio drops below 1.0, it means that cryptocurrency hodlers are selling coins at a loss. Low aSOPR values also mean that fewer old and highly profitable coins have been spent. In other words, long-term hodlers are confident that the cryptocurrency price will continue to rise.
New investors come to the bitcoin market
According to Glassnode, the market is seeing an influx of «new retail investors.» One example is the increased focus on accounts and subscriptions on cryptocurrency exchanges.
Thus, a fall in the aSOPR ratio may be the first on-net indicator of «panic selling» by new entrants. The previous drop from $ 42K has not been reset in odds due to bullish news from Tesla.
However, the fall of aSOPR below zero does not mean that the market has entered a bearish trend. According to Glassnode, «this time it could be different.» To confirm their theory, experts refer to the ongoing decline in market liquidity.
According to analysts, the trend towards long-term storage indicates that Bitcoin has come to be seen as an important macro asset. Glassone admits that there is still room to fall in this correction. However, despite the fact that on-chain metrics are being reset, the market is still in demand from long-term investors, the experts summed up.