Bitcoin’s bull market retracements are becoming less severe, according to on-chain analysis firm Glassnode. While sharp price increases are typically followed by periods of selling pressure, data suggests that the magnitude of these corrections is gradually diminishing as the market matures.
Glassnode’s analysis reveals that the most significant retracement in the current cycle occurred on August 5, 2024, with a 32% drop. However, most retracements have seen Bitcoin’s price fall only 25% below the local high, indicating relatively low volatility compared to previous cycles.
This reduced volatility may be attributed to several factors, including the introduction of spot Bitcoin ETFs, which has opened up significant new demand. Growing institutional interest in Bitcoin is also likely contributing to greater market stability.
Interestingly, while the supply held by most short-term holders (measured by the number of coins) is currently “underwater” – meaning their holdings are worth less than their purchase price – the associated unrealized losses are relatively moderate. This suggests that short-term holders are weathering the market dips without experiencing the extreme losses often seen in previous cycles.
Assessing the Current Correction:
Glassnode compares the current correction to previous market dips since October 2023, noting that it appears less severe in two key areas:
- Intensity: The price drawdown relative to the short-term holder cost basis remains moderate.
- Loss Dominance: The total supply held at a loss is less significant than in previous corrections. (The provided excerpt cuts off before completing this point, but the implication is that fewer holders are experiencing losses in the current correction.)
