The Hidden Forces Behind Bitcoin Price: Latest Insights From On-Chain Data

Leading
on-chain
analyst
James
Check,
popularly
known
as
Checkmatey,
has
recently
delved
into
the
intricacies
of
Bitcoin’s
market
dynamics,
offering
a
detailed
on-chain
data

analysis
that
sheds
light
on
the
forces
driving
Bitcoin
prices.
His
latest
insights
highlight
a
period
he
describes
as
“Quiet
and
Trending,”
suggesting
a
robust
underpinning
despite
significant
sell-side
pressures
and
shifts
in
volatility.

Bitcoin
Follows
The
Stair-Stepping
Rally-Consolidation-Rally
Pattern

Since
December,
Bitcoin
has
experienced
substantial
sell-side
pressure,
with
over
1.5
million
BTC
being
sold.
“Around
30%
of
this
came
out
of
GBTC,
but
the
rest
of
it
was
good
old
fashioned
profit
taking,”
Check
explains.
Despite
such
substantial
market
sales,
Bitcoin
has
demonstrated
resilience
with
a
relatively
modest
price
correction
of
just
-20%.
This
suggests
that
the
foundational
support
levels
for
Bitcoin
are
stronger
than
what
surface-level
market
movements
might
imply.

A
striking
aspect
of
Check’s
analysis
is
the
transformation
in
Bitcoin’s
volatility
profile.
“The
overall
realized
volatility
profile
for
Bitcoin
is
half
what
it
was
in
2021,
and
3x
smaller
than
2017,”
states
Check.
This
trend
indicates
a
growing
maturity
within
the
Bitcoin
market,
reflecting
its
evolution
into
a
more
stable
asset
over
time
compared
to
its
early
years.

Check
counters
the
typical
narrative
surrounding
Bitcoin’s
volatility:
“What
a
lot
of
people
forget
however
is
that
Bitcoin
is
volatile
to
the
upside.
Volatility
to
the
upside
is
good!”
He
posits
that
the
current
increment
in
volatility
is
moderate
and
suggests
that
the
market
is
still
in
the
early
phases
of
a
bull
run,
rather
than
nearing
its
end.

Related
Reading

A
critical
tool
in
Check’s
analysis
is
the

Short-Term
Holder
MVRV
(STH-MVRV)
Ratio,
which
he
uses
to
gauge
market
sentiment
and
phases.
According
to
Check,
this
ratio
consistently
finds
support
at
1.0
and
resistance
at
1.4
during
stable
uptrends.
Stability
is
maintained
as
long
as
the
ratio
remains
within
these
bounds.
“Only
when
it
breaks
above
this
ceiling
do
things
become
unstable,”
Check
notes,
which
could
signal
a
transition
to
bearish
conditions.

Despite
the
sell-off
that
brought
Bitcoin
down
to
$57k,
Check
observes
that
this
has
not
significantly
dented
the
profitability
of
short-term
holders.
“The
magnitude
of
Unrealised
Loss
was
very
much
in
line
with
bull
market
corrections,
calming
fears
of
a

top-heavy
market.”

Related
Reading

He
further
highlights
that
several
of
the
local
top
buyers
panic
sold
their
Bitcoin
at
the
lows,
an
action
he
interprets
as
beneficial
for
the
correction
phase,
serving
to
stabilize
the
market
by
shaking
out
weak
hands.

Expanding
his
analysis,
Check
refutes
the
criticism
that
Bitcoin’s
volatility
makes
it
a
less
viable
asset.
He
points
to
a
chart
comparison
of
Bitcoin’s
30-day
volatility
against
top-performing
US
stocks,
showing
that

Bitcoin’s
volatility
is
well
within
a
manageable
range.

Furthermore,
he
discusses
the
lower
realized
volatility
of
the
SPY
index,
attributing
it
to
the
“out
sized
performance
of
the
Magnificent-7,”
which
is
counterbalanced
by
the
poorer
performance
of
the
other
components.

By
highlighting
the
structural
aspects
of
the
current
“Quiet
and
Trending”
market
phase,
Check
offers
a
refined
perspective
on
how
Bitcoin
is
navigating
its
maturation
pathway,
balancing
between
its
speculative
origins
and
its
potential
as
a
mainstream
financial
asset.

He
concludes,
“Overall,
the
Bitcoin
uptrend
in
2023-24
looks
fairly
structured,
following
stair-stepping
rally-consolidation-rally
pattern.
However,
as
the
charts
above
show,
volatility
tends
to
pick
up
during
a
consolidation,
and
that
can
lead
to
instability.”

At
press
time,
BTC
traded
at
$66,288.

Featured
image
created
with
DALL·E,
chart
from
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