The Hidden Forces Behind Bitcoin Price: Latest Insights From On-Chain Data

Leading on-chain analyst James Check, popularly known as Checkmatey, has recently delved into the intricacies of Bitcoin’s market dynamics, offering a detailed on-chain data analysis that sheds light on the forces driving Bitcoin prices. His latest insights highlight a period he describes as “Quiet and Trending,” suggesting a robust underpinning despite significant sell-side pressures and shifts in volatility.

Bitcoin Follows The Stair-Stepping Rally-Consolidation-Rally Pattern

Since December, Bitcoin has experienced substantial sell-side pressure, with over 1.5 million BTC being sold. “Around 30% of this came out of GBTC, but the rest of it was good old fashioned profit taking,” Check explains.
Despite such substantial market sales, Bitcoin has demonstrated resilience with a relatively modest price correction of just -20%. This suggests that the foundational support levels for Bitcoin are stronger than what surface-level market movements might imply.

A striking aspect of Check’s analysis is the transformation in Bitcoin’s volatility profile. “The overall realized volatility profile for Bitcoin is half what it was in 2021, and 3x smaller than 2017,” states Check. This trend indicates a growing maturity within the Bitcoin market, reflecting its evolution into a more stable asset over time compared to its early years.

Check counters the typical narrative surrounding Bitcoin’s volatility: “What a lot of people forget however is that Bitcoin is volatile to the upside. Volatility to the upside is good!” He posits that the current increment in volatility is moderate and suggests that the market is still in the early phases of a bull run, rather than nearing its end.

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Despite the sell-off that brought Bitcoin down to $57k, Check observes that this has not significantly dented the profitability of short-term holders. “The magnitude of Unrealised Loss was very much in line with bull market corrections, calming fears of a top-heavy market.”

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Featured image created with DALL·E, chart from TradingView.com

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