Why is Bitcoin price stuck?

Bitcoin (BTC) price has been consolidating within a roughly $4,700 range over the past 10 days as the $60,000 level remained a stubborn resistance.

Since March, Bitcoin has  between its resistance level at $72,000 and $54,000 where it has found support

Let’s look at the reasons why BTC price remains stuck today.

Lacklustre demand for Bitcoin weighs down BTC price

Bitcoin’s price has remained stagnant in recent weeks primarily due to demand-side inactivity, as revealed by data from Glassnode.

Data from Farside Investors and CoinShares reveal that inflows into Bitcoin investment products totaled $436 million over the week ending Sept. 13. Despite this, BTC continued with its range-bound price action, leading to questions about why the inflows have not translated into a rally.

Glassnode explained that the Bitcoin market is currently characterized by minimal capital inflows, which explains why BTC price has been trading in a “range-bound manner for the last six months. 

“The Realized Cap has peaked and plateaued at $622B in the previous two months. This suggests that the majority of coins that are being transacted are doing so within proximity of their original acquisition price.”

Using the Net Realized Profit / Loss metric to assess the daily change in onchain capital flows for Bitcoin, measured in U.S. dollars, Glassnode said: 

“At present, we can see that both profit and loss forces are largely equal, resulting in a marginal netflow and a general oscillation around the zero bound. This alludes to a degree of equilibrium being established in the market”Net Realized Profit / Loss (USD). Source: Glassnode

Minimal profit and loss-taking at the current range

Glassnode analysts also used the Sell-Side Risk Ratio to assess the absolute sum of realized profit and loss locked in by investors relative to Bitcoin’s Realized Cap. A high value indicates that investors spend coins at a significant profit or loss relative to their cost basis, while a low value indicates that investors are spending their coins relatively close to their break-even cost basis. 

The findings revealed that this metric has dropped below the “low-value band,” suggesting minimal profit and loss-taking is happening at current price levels. 

“The interpretation here is that equilibrium has been reached, and there is a need for further range expansion to incentivize investors to spend their coins (take profit or loss).”Bitcoin Sell-side Risk Ratio. Source: Glassnode

Related: Bitcoin’s ‘local market structure’ could push BTC price to new all-time high — Analysts

Additional data from market intelligence firm IntoTheBlock helps to explain the ongoing stalemate between buyers and sellers. Its in/out of the money around price (IOMAP) model reveals that the price is currently between two significant levels.

There is robust support around the $58,000 to $59,700 demand zone, where approximately 954,240 BTC were previously bought by 2.1 million addresses.

On the upside, the supplier congestion zone between $59,800 and $63,00 poses a stiff barrier for the bulls. This is where approximately 1.2 million BTC were previously bought by roughly 3.02 million addresses.

Note these price levels are just below or above the spot price, suggesting that there is a tug-of-war between the bears and the bulls.

The Bitcoin liquidation heatmap by Coinglass reveals heavy ask orders above the spot price and bid positions below, as shown in the figure below. This highlights the relative tightness of the current market structure.

Source