Glassnode Study Signals High-Risk Bitcoin Regime, Hints at Early Bull Market Stage

In the wake of the market’s recovery from the FTX collapse, a notable shift has occurred, pushing bitcoin into a high-risk regime, as indicated by the onchain analysis firm, Glassnode. The firm’s latest report notes that this regime typically signals a pivotal phase often preceding the onset of bull markets, where long-term investors begin to see a return to profitability.

Bitcoin Enters High-Risk Regime: A Precursor to Bull Markets

Glassnode‘s latest Risk Assessment Framework study introduces a nuanced approach to understanding bitcoin’s (BTC) market cycles through onchain data. By analyzing short-term and long-term risk cycles, the framework offers a>

At the core of Glassnode’s analysis are metrics like the MVRV Model and Mayer Multiple, which together delineate the market’s current risk status. These indicators highlight the deviation of bitcoin’s price from its long-term averages, presenting a methodical way to identify speculative bubbles and bottom formations.

The Glassnode researcher, known as Cryptovizart, says the recent elevation of these metrics into the high-risk category underscores the speculative nature of current market conditions, yet it historically aligns with the early stages of market recoveries. Additionally, the report emphasizes the role of investor behavior, particularly through the Percent of Supply in Profit and Net Unrealized Profit/Loss metrics.

These indicators provide insights into the potential for increased selling pressure and the overall sentiment of greed or fear among market participants. The current positioning within the high-risk domain suggests a cautious optimism, with a significant portion of the market holding coins accumulated at lower price points during the previous consolidation phase.

By assessing spending patterns and demand for block space, Glassnode further identifies shifts in market dynamics that precede major price movements. Currently, the high-risk indicators highlight an environment ripe with speculation, yet buoyed by a solid foundation of long-term investor profitability and renewed market activity. While caution remains paramount, the analysis underscores the inherent optimism among long-term investors, suggesting a strategic moment for market entry.

“These risk factors consider a wide set of data and investor behavior categories, helping to establish a framework for analysts and investors,” Glassnode’s report concludes. “Whilst each indicator can be used individually, the combination often provides a more comprehensive picture of the state of the market.”

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