One of most important indicators in on-chain analysis has something to show
Long-term holder’s actualized price and short-term holder’s actualized price are two important metrics used on-chain analysis, and the cross between them is historically significant. This should bring back some volatility in the market.
The last time we saw the cross between two lines was around 2019, which happened prior to Bitcoin’s plunge to a multi-year low at $3,100. When the short-term realized price drops below the long-term realized price, the market is considered extremely oversold.
Whenever the profitability of digital gold is very low, investing in it backfires as investors can increase their potential profit by entering at a lower price. Technically, a fall below the actual price of bitcoin for short- and long-term holders is an important sign indicating the network’s extremely low profitability.
Two scenarios
With the profitability of the market dropping to new lows and realized price reaching values we have not seen for a year, we might see two options for how things can go from here: a spike in the trading volume on the market with institutional investors starting a buying spree or a sudden increase in selling pressure as both short- and long-term investors would like to exit at the breakeven point or a relatively small loss.
Unfortunately, both scenarios are equally likely, given the lack of inflows for the industry in general, tighter monetary policy in the US, and a historically problematic September, which in the past brought nothing but losses to the market.
As for now, the market awaits the upcoming CPI data and FOMC meeting that should provide some volatility for Bitcoin and cause at least short-term movement on the market.
