According to data from on-chain analytics firm Glassnode, the Bitcoin market correction is continuing and could be down slightly.
In its “Week on Chain” report released on May 1, Glassnode revealed the extent of the market correction if it continues.
On-chain indicators
Bitcoin has corrected 10% from its 2023 highs of just under $31,000 in mid-April. However, the market could drop further from the current price of around $28,000.
The blockchain analytics firm examines the concept of “old/young” wealth redistribution through upcycles. It uses these metrics to measure market demand.
The report concluded that the impact of new investors on the market was driven primarily by the performance of their unrealized and realized profits. Furthermore, the selling pressure from new investors was “a key driver in establishing resistance at $30,000.”
“If the current correction continues, the cost base for young providers at $24,400 is likely to be a psychological level to monitor in the coming weeks.”
Correction deepen
Glassnode categorizes “young supply” as coins that have been held for less than six months, and “old supply” as coins that have been held for longer periods of time.
The monthly net position change in supply shows that selling pressure has reached a steady pace of 250,000 BTC per month.
It said the pattern looked similar to the 2019 uptrend, which had a long "balancing period" before the 2021 bull run. This suggests the market could move sideways for much of the rest of the year after a correction.
In addition, the transfer of wealth denominated in US dollars to the Yang supply zone has increased. However, it is still "very low" and has not reached the previous bull market threshold.
“This suggests that new demand inflows remain relatively weak, but supply remains largely held by longer-term, higher conviction holders.”
Young suppliers and new investors are the main force in the bull market uptrend. However, the current on-chain situation shows that their appetite is weakening.
Glassnode also analyzed the MVRV (Market Value to Realized Value) ratio, which measures market capitalization versus realized capitalization. In other words, the ratio between spot price and on-chain cost basis.
The indicator also suggests a resistance level of $30,000 with an MVRV ratio of 1.33. A move back to the breakeven value of 1 would lead to a correction to $24,400, which would act as support.