The Bitcoin market correction continues and it could drop slightly, according to data from on-chain analytics firm Glassnode.
In its “Week on Chain” report released on May 1, Glassnode revealed how far the market correction could go if it continues.
Bitcoin on-chain metrics
Bitcoin has already corrected 10% from its 2023 high below $31,000 in mid-April. However, the markets could drop much more than the current prices of around $28,000.
A blockchain analytics company looked at the concept of “old/young” redistribution of wealth through upward cycles. These metrics were used to measure market demand.
The report concluded that new investors are influencing the market, largely driven by their unrealized and realized earnings performance. Moreover, selling pressure from new investors was “a major driving force that established resistance at $30,000,” she said before adding.
“Should this current correction resume, the cost basis for young bidders at $24.4k could be a psychological level to watch in the coming weeks.”
Glassnode classifies “young supply” as coins held for less than six months and “old supply” as coins held for longer.
The monthly net change in the young supply position indicates that the selling pressure has reached a flat rate of 250,000 BTC per month.
She said the patterns looked similar to the 2019 uptrend, which had a long “balancing period” before the 2021 bull market. This indicates that markets may head sideways for much of the remainder of this year after correcting.
Moreover, the transfer of US dollar-denominated wealth to the youth supply area has increased. However, it is still “significantly lower” and has not reached the previous bull market thresholds.
“This suggests that new demand inflows are still relatively weak, but supply remains mostly dominated by those of higher conviction in the long run.”
Young supply and new investors are the primary forces in the bull market’s upside. However, the current situation on the chain suggests that their appetites are waning.
Glassnode also analyzed the MVRV (Market to Realized Value) ratio, which measures market capitalization versus realized capitalization. In other words, the ratio between the spot rate and the on-chain cost basis.
The metric was also indicating that the $30,000 resistance level had an MVRV ratio of 1.33. Returning to the breakeven value of 1 would see a correction to $24,400, which acts as support.
BTC price forecast
Bitcoin price is down 2% on the day to just under $28,000 at the time of writing. BTC hit an intraday and week low of $27,722 during the Asian morning trading session.
The next immediate support level is around $27,400 in case of a breakdown at the current levels. On-chain metrics indicate that this correction is far from over.
In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.