Bitcoin Market Still Unprepared for Growth, According to Blockchain Analysis

In a recent analysis of on-chain data, it's suggested that the Bitcoin market may not be ready for significant price growth in the short term. This conclusion is supported by the multiple attempts the leading cryptocurrency has made to recover over the last few weeks.

Key Takeaways

Recent analysis indicates that Bitcoin is unlikely to see significant price growth soon.
The Net Realized Profit/Loss (NRPL) metric showed a peak of $17 million/hour before Bitcoin's price declined.
Profit-taking by investors has created bearish pressure on the market.
Short-term holders are realizing losses, contributing to potential further declines in Bitcoin's price.

Bitcoin

Insights on Bitcoin’s Recent Price Activity

Currently, the situation surrounding Bitcoin remains cautious. According to a March 20 post on the social media platform X, the on-chain research firm Glassnode detailed the factors contributing to Bitcoin's recent decline from what appeared to be a growth phase. This analysis focuses on the Net Realized Profit/Loss (NRPL) metric, which monitors whether the market is realizing profits or losses by assessing the realized amounts by holders over a 24-hour period.

Glassnode identified that the NRPL metric recently peaked at approximately $17 million per hour, just before Bitcoin's price began to drop again. This trend has been cited as a contributing factor to the cryptocurrency losing its $70,000 support level.

Bitcoin
Source: @Glassnode on X

The analytics firm pointed out that increased profit-taking among Bitcoin investors has absorbed much of the bullish momentum and, in turn, converted it into bearish pressure. This pattern of profit-taking has been observed repeatedly within the current market cycle, particularly when Bitcoin attempts to rise.

Glassnode also explained that ongoing geopolitical uncertainties have compressed "demand depth," making it difficult for the market to absorb large profit-taking events. This situation contributed to Bitcoin's recent decline below the $70,000 mark.

Moreover, after Bitcoin dropped below the $85,000 support level, a notable increase in on-chain activity occurred as investors repositioned their liquidity. Nonetheless, reduced market liquidity in recent weeks suggests that Bitcoin's price recovery is more a result of seller fatigue than a reflection of strong, consistent demand. Consequently, any recovery efforts are limited whenever sellers re-enter the market.

Increased Losses Among Short-Term Holders

Separately, crypto analyst Darkfost has noted that Bitcoin's short-term investors have been realizing losses in the past few weeks. This trend is illustrated by the Short-Term Holder Profit and Loss to Exchanges Sum metric.

In a post on X, Darkfost highlighted that over 28,000 BTC have been sent to exchanges, indicating that these investors are cutting their losses. As the price of Bitcoin has steadily declined, these losses have continued to accumulate.

As a result, we can anticipate heightened bearish pressure from this group of investors. Additional panic-driven sales are likely to add to the already bearish momentum in the Bitcoin market. Thus, rather than an optimistic outlook, current price trends appear to signal caution for investors.

As of this writing, Bitcoin is valued at approximately $70,532, showing no notable change over the past day.

Bitcoin
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView