Glassnode, a crypto analysis platform, has raised concerns about the Bitcoin market being at a “high-risk” level based on on-chain indicators. These indicators, including the long-term holder market value to realized value (MVRV) indicator, suggest that the cryptocurrency may be in the early stages of a bull market. Glassnode’s analysis reveals that Bitcoin’s long-term valuation relative to its market value has surpassed the “mid-risk” zone and is firmly in the “high-risk” band. This indicates that long-term investors are experiencing a meaningful level of profitability.
Glassnode has assigned high or very high-risk ratings to seven out of ten indicators, including MVRV, supply profitability state, and net unrealized profit/loss. Despite significant increases in crypto asset prices, there is a low level of realized profit locked in by investors. However, Glassnode notes that demand for Bitcoin blockspace and short-term profit-taking by new investors are categorized as “low risk.” Additionally, the recent sell-off after the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States has reduced risk across the broader market.
Bitcoin’s price has been steadily increasing, rising from $42,317 on February 4 to $48,582 at the time of publication. This corresponds to a 14% gain in the past week, according to CoinGecko. The recent strength of Bitcoin is attributed to decreasing outflows from the Grayscale Bitcoin Trust (GBTC) and significant inflows into spot Bitcoin ETFs since their launch on January 11.
In summary, Glassnode’s on-chain indicators suggest that the Bitcoin market is currently at a high-risk level. While long-term investors are experiencing meaningful profitability, there is a low level of realized profit locked in. However, certain factors, such as demand for Bitcoin blockspace and reduced risk after the sell-off following the approval of spot Bitcoin ETFs, are categorized as lower risk. The price of Bitcoin has been steadily increasing and has gained 14% in the past week, driven by decreasing outflows from the GBTC and significant inflows into spot Bitcoin ETFs.