A new report from the on-chain analytics firm Glassnode has discussed about whether this Bitcoin bull run is looking sustainable or not.
Bitcoin URPD Reveals Where This Run Differs From The Q1 Rally
According to the latest weekly report from Glassnode, the structure of the Bitcoin UTXO Realized Price Distribution (URPD) has been different for the latest rally than the last one.
The URPD here refers to an on-chain indicator that basically tells us about the amount of the cryptocurrency’s circulating supply that was last purchased around a specific price level.
Here is a chart that shows how this distribution stood on the 13th of March, when the previous BTC rally top occurred:
Looks like the buying didn't occur uniformly across the price levels | Source: Glassnode's The Week Onchain - Week 48, 2024
From the above graph, it’s apparent that accumulation didn’t occur uniformly during the BTC price rally in the first quarter of the year, as some of the levels visited during the run were left relatively thin with supply.
These supply ‘chasms,’ however, were still separated by levels that were indeed centers of major trading activity. Thus, while the investors didn’t get to buy at all the levels the rally went through, it paused enough for them to build supply walls at certain points.
Note that the version of the URPD displayed in the chart is the “entity-adjusted” one, meaning it specifically tracks data related to entities rather than addresses. An “entity” refers to a cluster of addresses that Glassnode’s analysis determined belong to the same investor.
Thus, the indicators adjusted for entities ignore transactions between the addresses of a given entity. This makes for a more accurate approach as transactions between the wallets of the same user aren’t really of consequence to the wider sector.
Since March, more than half a year has passed, with Bitcoin having explored significantly higher levels. As such, the URPD has changed a lot. Below is a chart that shows how the indicator is like for BTC today.
The current supply distribution appears to have a wide chasm | Source: Glassnode's The Week Onchain - Week 48, 2024
As is visible in the graph, the $54,000 to $73,000 range, the one that was of interest in the previous chart, now holds the cost basis of a huge amount of the supply.
This change is naturally a result of the long phase of consolidation that BTC was stuck in prior to the latest breakout. As investors constantly traded at these price levels, supply started accumulating on them, and before long, the range turned into one of the most notable supply clusters in Bitcoin history.
It’s also highlighted in the chart, however, that the $73,000 to $88,000 range is in very sharp contrast to the $54,000 to $73,000 one, as very little of the supply became involved in trading inside it.
The reason behind this lies in the rapid speed of the recent bull run; Bitcoin mowed through these levels so fast that investors simply didn’t get the time to participate in enough activity at them.
In on-chain analysis, thick supply clusters are believed to be support centers for the cryptocurrency. The demand zones that the last rally created helped the asset in the sideways movement that followed and the huge supply cluster that this consolidation formed in turn paved way for the most recent rally.
As the $73,000 to $88,000 range is a wide-open chasm, it’s possible that if BTC corrects that far, it may easily slip deep into it, due to the lack of any support levels to fall back on.
BTC Price
Bitcoin has been declining recently, but so far, the asset has managed to stay clear of the supply chasm as its price is currently trading around $94,200.
The price of the coin seems to have been going down recently | Source: BTCUSDT on TradingView