• The Bitcoin price is up 40% YTD and has recaptured the $23,000 level, but investors are unsure of the sustainability of the rally.
• Glassnode examines whether the rally is a bull trap or if a new bull run is in the horizon.
• On-chain data suggests the current bear market is similar to the 2018-2019 bear market in terms of duration and investor behavior patterns.
Bitcoin, the world’s leading cryptocurrency, has seen an impressive rally of 40% year-to-date (YTD), pushing the price back up to the $23,000 level. Despite this significant increase, many investors are still uncertain about the sustainability of the recent price rally as ongoing concerns around DCG and Grayscale, as well as macroeconomic uncertainties, continue to loom. This has led to many investors looking to capitalize on the current prices and gain some liquidity, especially after the long and painful bear market in 2022.
In this regard, Glassnode, a renowned on-chain analysis firm, has released a report exploring whether Bitcoin’s current price spike is a bull trap or if indeed a new bull run is on the horizon. The report takes a look at two indicators, Investor Price and Delta Price, which have been used to measure price movements in the past. According to the report, Bitcoin prices stayed within the confines of the Investor-Delta price band for a similar amount of time (78 days) in both the 2018-2019 bear market and the current bear market. This suggests an equivalency in durational pain across the two bear markets.
In addition to the duration component of the bottoming phase, Glassnode also points to the compression of the investor delta price range, which indicates that investors have become more risk-averse and have chosen to take profits or exit positions when prices have gone up. This suggests that investors are more cautious with their Bitcoin holdings, indicating that the current rally may not be as strong as one would expect.
Overall, Glassnode’s report suggests that while Bitcoin’s recent bounce above the price it has last seen before the FTX collapse is encouraging, it is still too early to tell if the rally will be sustained or if it is a bull trap. With higher prices, investors may be motivated to exit positions and gain liquidity, while also staying cautious of the potential risks.