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Cryptocurrency analytics company Glassnode’s on-chain data signals suggest Bitcoin (BTC) may be ready for a significant price drop. Leading this prediction is the long-term holders’ (LTH) market inflation rate. The LTH market inflation rate uses accumulation or distribution levels to determine Bitcoin’s next direction. However, as shown in the chart below, there are two lines in this graph.
Expectations of BTC Increase
In bull cycles, market inflation falling below nominal inflation indicates long-term investors are accumulating. This situation could lead to a price increase for Bitcoin. On the other hand, market inflation rising above nominal interest could significantly increase selling pressure from investors. Therefore, BTC may be on the brink of a notable decline. At the time of writing, the metric formed the second model. Bitcoin was trading at $69,164 at the time of writing. This number represents a 2.98% increase over the last seven days.
The mentioned metric is the abbreviation for long-term holder-net unrealized profit/loss. Thus, insights can be gained into the behavior of long-term holders. At the time of writing, LTH-NUPL was in the belief zone. This indicates that holders who have held the token for at least 155 days trust Bitcoin’s potential. However, the same individuals might contribute to BTC’s distribution, which may not be valid in the short term.
Critical Zone for Bitcoin
The liquidation heatmap helps investors find the best liquidity positions. If liquidity concentrates in an area, prices may move in that direction. However, high liquidity areas can also be resistance or support zones. According to Hyblock’s data, a magnetic zone was identified at $72,350, indicating Bitcoin price could move towards this area. However, the same zone could act as resistance for cryptocurrency. If BTC rises to the mentioned price and gets rejected, it could spell disaster for the cryptocurrency. This is because the other high liquidity area is at $63,050.
