• Glassnode analyzed the state of Bitcoin and believes volatility is imminent 
• The analysis focuses on decreasing sell pressure, tightening price range, and more
• The price could go either way, the research suggests

Bitcoin may soon experience significant price swings in the short-term, since the sell pressure is diminishing, and the market is quickly approaching a state of equilibrium. This is according to new in-depth analysis from on-chain data analytics platform Glassnode.

Seeking Liquidity

Earlier this week, Glassnode published an analysis on the state of Bitcoin, and what we can expect price-wise, in the short-term. Called Seeking Liquidity, the article discusses three key points that should result in a strong move to either side: positive capital flows, diminishing sell-side pressure, and the tightening up of “several measures of volatility”.

“As the price hit the $100k level, net capital inflows into Bitcoin surged, signifying investors were locking in substantial profits,” Glassnode explains. “These capital inflows have since started to decline in magnitude as the market consolidates and acclimatises to the new price range.”

Currently, the balance of realized profit and loss volumes is nearly neutral, reflecting a reset in supply and demand dynamics. 

“Profit taking volumes reached a peak of +$4.5B in December 2024, and have now declined to a value of +$316.7M (-93%),” the researchers continue, arguing why we soon might see large green candles.

Slowdown in Supply

At the same time, there’s been a “noteworthy decline” in overall sell-side pressure. Using metrics like Coinday Destruction, as well as exchange inflow volumes, Glassnode concluded that the majority of investors looking to lock in profits have already done so. 

“Generally speaking, this indicates that the market may need to go ‘somewhere else’ in order to entice and unlock the next wave of supply.” In other words, there will be fewer bitcoin for sale, and fewer investors looking to buy. Therefore, either the remaining investors will drive the price upwards, or the decline in demand pushes the price down.

Brace for Volatility

Finally, the price range seems to be narrowing down, which is also a major signal of volatility. Looking at the prices for the last 60 days, Glassnode determined that the lows are getting higher, while the highs are getting lower, compressing the price in an ever-tightening coil. 

“All of these instances have occurred prior to a significant burst of volatility, with the majority being in early bull markets, or prior to late stage capitulations in bear cycles.”

While it doesn’t explicitly say so, Glassnode does hint at a potential move to the upside. After all, we don’t seem to be approaching late stage bear cycle capitulation right now.