Cryptocurrency analysis firm Glassnode has indicated through its on-chain data that Bitcoin (BTC) may be facing a significant decline in value. This prediction is based on the market inflation rate among long-term holders (LTH). This rate helps to predict Bitcoin’s future direction by analyzing accumulation and distribution trends. The chart illustrating this concept features two lines.

Expectations for Bitcoin’s Rise

In bullish cycles, when market inflation falls below nominal inflation, it suggests that long-term investors are accumulating Bitcoin. This could potentially lead to a price increase. Conversely, if market inflation exceeds nominal inflation, it could lead to a rise in selling pressure from investors, possibly resulting in a notable price drop. As of now, the metric suggests the latter scenario. At present, Bitcoin is valued at $69,164, marking a 2.98% rise over the past week. Stay updated with the latest tech news through NEWSLINKER.

The metric in question is abbreviated as long-term holder-net unrealized profit/loss (LTH-NUPL), providing insights into long-term holder behavior. Currently, the LTH-NUPL is in the belief zone, indicating that holders who have possessed Bitcoin for at least 155 days have faith in its potential. However, these same investors might start selling, affecting the price negatively in the short term.

Crucial Zone for Bitcoin

The liquidation heatmap assists investors in pinpointing optimal liquidity positions. If liquidity is concentrated in a particular area, prices might move towards that zone. High liquidity areas can also act as support or resistance levels. According to Hyblock’s data, a key zone has been identified at $72,350, suggesting that Bitcoin might gravitate towards this price. However, this area might also serve as resistance. If Bitcoin reaches this price and faces rejection, it could be disastrous for the cryptocurrency, as another significant liquidity zone is located at $63,050.

In conclusion, while Bitcoin shows potential for a price increase due to long-term investor accumulation, rising market inflation and critical liquidity zones present risks that could lead to a significant price drop. Investors should closely monitor these metrics to make informed decisions.