• Bitcoin’s December rally after the fall of FTX surprised many investors, says Glassnode in its weekly report.
• Bitcoin could see more upside but a fresh buy signal is likely at prices around $28.3k.
• A selloff above $23.3k is more likely due to short-term holders and pressure from the miner for exit liquidity.

The price of Bitcoin remains close to $23,000 after a breakout pushed the value of the leading cryptocurrency above the psychological level of $20k.

As shown over the weekend, Bitcoin’s rise to prices above $23,000 surprised many, and while optimism is high among bulls, liquidity is likely to disappear from profit booking. In particular, this may be the view given how brutal the 2022 bear market has been for short-term holders and miners.

Glassnode is an on-chain data platform highlighted this possibility.

The recent market rally has come under pressure #Bitcoin prices above $23k, surprising many investors.

However, with higher prices comes an increased incentive for network participants to take exit liquidity, especially after the extended 2022 period.

Read here 👇https://t.co/D5QY9n5dp7

— glassnode (@glassnode) January 23, 2023

Glassnode’s view after BTC’s latest price action

According to on-chain data firm Glassnode, Bitcoin observes “almost out of the woods,” but the price move to levels in the $21k to $23k region also recovered some on-chain pricing models.

A look at the Investor Price ($17.4k currently) and Delta Price ($11.4k), shows similar price action at the bottom of the 2018-2019 bear market. Investor Price is the average price at which investors received the spent coins and miner-distributed coins, and Delta Price is derived from Realized Cap minus Bitcoin’s all-time Average Cap to get a technical pricing model.

Underlying this expectation is the price discovery phase, which lasted 78 days during 2018 at the bottom of the market. The current market is at a similar level, with BTC above the Realized Price of $19.7k.

«This suggests an equivalence in long-term pain throughout the darkest phase of both bear markets,” Glassnode wrote in its weekly newsletter report.

Still on the Investor Price/Delta Price metric, the on-chain platform focuses on a measure called compression, which takes into account the spot price to determine the severity of market undervaluation. The metric is also correlated with the scale of change in Realized Cap or asset capital inflow volume, with a threshold zone of 0.15-0.2.

Considering BTC’s current price and compression value, Glassnode reckons that a bullish confirmation signal could be activated if Bitcoin bulls claim $28.3k.

More hope for bulls

The bull case is also helped by the Supply in Profit measure, which has risen 12% over the past two weeks from 55% to 67%. The spike percent of coins in profit is “the sharpness” of all previous bear markets, suggesting that much more coins changed hands below the $23.3k level.

Also key to the bulls’ case is that the price of Bitcoin at current levels is above the three cost bases of long-term holder, short-term holder and BTC Realized Price. This is the first time that the spot price has pierced the three Realized Prices and continued momentum above the positive levels.

The recent boom i #Bitcoin Price action has resulted in an initial breakout across all three cost bases for the first time since the 2018/19 bear market and the March 2020 Covid crisis.

A prolonged period above these key psychological levels would be considered beneficial. pic.twitter.com/kyzuwSPenv

— glassnode (@glassnode) January 24, 2023

Bull trap situation

While Glassnode focuses on potential bull scenarios, its report also highlights likely scenarios of fresh selling pressure.

According to the data report on chain, one of these is the “significant spike in profitability,” says the platform that raises the possibility of selling pressure that encourages short-term holders.

Miners are also likely to be motivated by the price action and may look to liquidate some of their holdings, adding to a possible BTC price pullback.