Leading on-chain analyst James Check, popularly known as Checkmatey, has recently delved into the complexities of bitcoin market dynamics, offering detailed on-chain data. x.com/_Checkmatey_/status/1791222725274370193″ target=”_blank” rel=”nofollow”>analysis That sheds light on the forces driving bitcoin prices. His latest insights highlight a period he describes as “calm and trending,” suggesting solid underpinning despite significant selling pressures and swings in volatility.
Since December, bitcoin has seen significant selling pressure, with over 1.5 million btc sold. “About 30% of this came from GBTC, but the rest was old-fashioned profit taking,” Check explains. Despite such substantial market selling, bitcoin has demonstrated resilience with a relatively modest price correction of just -20%. This suggests that fundamental support levels for bitcoin are stronger than surface market movements might imply.
A surprising aspect of Check's analysis is the transformation of bitcoin's volatility profile. “The overall volatility profile observed for bitcoin is half of what it was in 2021 and 3 times lower than in 2017,” says 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 volatility: “However, what many people forget is that bitcoin is volatile to the upside. Upside volatility is good!” He posits that the current increase in volatility is moderate and suggests that the market is still in the early stages of a bull run, rather than nearing its end.
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A key tool in Check's analysis is the Short-Term Headline MVRV Index (STH-MVRV), which it uses to measure market sentiment and phases. According to Check, this ratio consistently finds support at 1.0 and resistance at 1.4 during stable uptrends. Stability is maintained as long as the relationship remains within these limits. “Only when it surpasses this ceiling do things become unstable,” Check notes, which could indicate a transition to bearish conditions.
Despite the sell-off that saw bitcoin fall to $57,000, Check notes that this has not significantly affected the profitability of short-term holders. “The magnitude of unrealized losses was very much in line with bull market corrections, calming fears of a very heavy market.”
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He also highlights that several of the main local buyers, in panic, sold their bitcoin at the lows, an action that he interprets as beneficial for the correction phase, since it serves to stabilize the market by shaking off the weak hands.
Expanding on his analysis, Check refutes criticism that bitcoin's volatility makes it a less viable asset. He points to a graphical comparison of bitcoin's 30-day volatility with top-performing US stocks, showing that bitcoin's volatility is within a manageable range.
Furthermore, it analyzes the lower observed volatility of the SPY index, attributing it to the “huge performance of the Magnificent-7”, which is offset by the worse performance of the other components.
By highlighting the structural aspects of the current “calm and trending” market phase, Check offers a refined perspective on how bitcoin is navigating its maturation path, balancing its speculative origins and its potential as a mainstream financial asset.
He concludes: “Overall, bitcoin's bullish trend in 2023-24 seems quite structured, following a staggered rally-consolidation-rally pattern. However, as the charts above show, volatility tends to increase during a consolidation and that can lead to instability.”
At the time of publication, btc was trading at $66,288.
