Moving over to bitcoin, Kraken looked at another on-chain metric known as the Reserve Risk and determined that bitcoin also remains well below historically overbought levels.
The Reserve Risk indicator is derived by dividing bitcoin’s price by the so-called “HODL Bank,” a measure of the opportunity cost of holding BTC rather than selling over the lifetime of the bitcoin network. And according to the indicator, bitcoin’s reserve risk is now “significantly below” the level from the last all-time high in May.
Like the MVRV Z-score for ETH, bitcoin’s reserve risk also signals that the price has “room to run higher” before reaching overbought territory, Kraken wrote.
BTC\’s reserve risk and price:
In conclusion, the report noted that supply of both BTC and ETH on exchanges are at multi-year lows, which it said suggests that holders have conviction about their positions. However, it also warned that sentiment can change quickly, and that corrections are an inevitable part of the market.
Meanwhile, and on a slightly more bearish note, the on-chain analytics firm Coin Metrics wrote in its latest report that the crypto market may see selling pressure rise.
“Short-term market pressure might be rising due to changing macroeconomic conditions,” the firm wrote, while citing sharply rising US bond yields as one example of this. When the “risk-free” rate that can be obtained from bonds rise, this could negatively impact assets with a higher perceived risk such as crypto, the firm reminded.
At 14:44 UTC on Tuesday, BTC is trading at USD 56,777, down 2.4% over the past 24 hours and nearly 11% over the past seven days. At the same time, ETH is changing hands at USD 4,204, down almost 1% for the day and 8.2% for the week.
– Bitcoin Rally Healthy, Less Leverage Than in the Past, Say On-Chain Analysts
– Still Upside Potential in Bitcoin, While ETH Faces Competition – Kraken
– Ethereum Fee Debate Heats Up as Avalanche Enters and Exits Top 10
– BTC, ETH Find Support After Sell-Off, Long-Term Technicals Remain Strong