Glassnode’s Fair Value Models Puts The Crypto At $36,000

Bitcoin seems to be undergoing a period of consolidation and profit-taking after eight weeks of phenomenal price growth. The world’s largest crypto has had incredible growth this year, with a special surge starting in the middle of October. 

However, after hitting a yearly high of $44,500 on December 8, the price of Bitcoin has pulled back about 6% as some investors look to be taking profits. According to on-chain data provider Glassnode, several of its on-chain pricing models suggest Bitcoin’s fair value is currently between $30,000 and $36,000.

Bitcoin’s Price Rally Pauses As After A Resistance At $44,500

Bitcoin’s price appreciation this year led to a 150% gain which pushed it above $44,500, but on-chain data shows the hot streak has cooled off a bit after forming a resistance at this price level. 

This has led to many short-term investors taking profit from their holdings. According to data from Whale Alerts, there have also been various instances of large BTC transactions into crypto exchanges in the past few days, suggesting some whale addresses might also be participating in the selloff.

🚨 🚨 658 #BTC (26,893,152 USD) transferred from unknown wallet to #Binancehttps://t.co/QzyF0MRiHT

— Whale Alert (@whale_alert) December 13, 2023

A short-term correction was inevitable, according to crypto data firm Glassnode’s fair value models. Their analysis based on the investor cost basis and network throughput suggests the fair price is lagging behind the current market spike.

A metric cited was the Active Investor Realized Price, which monitors the degree of HODLing across the network. According to this model, Bitcoin’s spot prices are currently trading above its realized price (fair value). 

Taking a look at historical trends shows it has taken between 14 to 20 months between the realized price and the creation of an all-time high. The path to the creation of a new ATH has also always involved major spot price fluctuations of ±50% around the Active Investors Realized Price.

Source: Glassnode

The crypto asset is now 11 months into the break, with spot prices fluctuating between -38% and 21% of the realized price. If history repeats itself, we could see another few months of movements around the current fair value of $36,000. 

This price point correlates with a social media post by crypto analyst Ali Martinez. While noting IntoTheBlock data, the analyst noted strong support between $37,150 and $38,360, backed by 1.52 million addresses holding 534,000 BTC.

In case of a deeper correction, #Bitcoin finds solid support between $37,150 and $38,360. This zone is backed by 1.52 million addresses holding 534,000 $BTC.

Also, watch out for two resistance walls that could keep the #BTC uptrend at bay: one at $43,850 and another at $46,400. pic.twitter.com/NGm1XpMOLf

— Ali (@ali_charts) December 11, 2023

BTC bulls try to recover losses | Source: BTCUSD on Tradingview.com

Another technical pricing model cited by Glassnode was the Mayer Multiple. The Mayer Multiple indicator is now at a value of 1.47, close to the 1.5 level which often forms a level of resistance in prior bull cycles. 

Glassnode’s report also looked at various other pricing models, including the NVT Premium indicator which evaluates the utility of the network throughput in terms of a USD value. According to the NVT Premium, the recent rally is one of the biggest spikes since Bitcoin’s all-time high in November 2021, suggesting an overvaluation in relation to the network throughput.

What’s Next For Bitcoin?

Bitcoin is trading at $40,963 at the time of writing. Although the crypto is now down by 6% in a 7-day timeframe, it is still monitoring gains of 8.5% from its December open of $37,731. The $44,500 level is now a crucial level for the asset, as the industry continues to wait for a bullish run after the approval of spot Bitcoin ETFs in the US. 

The crypto market is still in bullish sentiment, with Coinmarket’s Fear & Greed Index pointing to a 73 greed. A power through $44,500 would signal the resumption of the bullish trend for Bitcoin. Another resistance level to watch after the break would be the $46,400 level.

Featured image from Chainalysis, chart from Tradingview.com

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