The hidden forces behind Bitcoin’s price: Insights from on-chain data

Published on:

Leading network analyst James Check, popularly known as Checkmatey, recently delved into the intricacies of Bitcoin market dynamics, offering detailed on-chain data analysis which sheds lightweight on the forces driving Bitcoin prices. His latest insights highlight what he describes as a “quiet and trending” period, suggesting solid fundamentals despite significant selling pressure and volatility changes.

Bitcoin follows a rally-degree-consolidation-rally pattern

Bitcoin has experienced significant selling pressure since December, with over 1.5 million BTC sold. “About 30% of that came from GBTC, but the rest was good old-fashioned profit-taking,” explains Check.
Despite this significant market sell-off, Bitcoin has shown resilience with a relatively diminutive price correction of just -20%. This suggests that underlying support levels for Bitcoin are stronger than surface market movements might suggest.

Bitcoin bull market declines | Source: X @_Checkmatey_

A striking aspect of Check’s analysis is the transformation of Bitcoin’s volatility profile. “Bitcoin’s overall realized volatility profile is half of what it was in 2021 and 3x what it was in 2017,” Check states. This trend indicates the increasing maturity of the Bitcoin market, reflecting its evolution towards a more stable asset over time compared to the early years.

Bitcoin realized volatility
Bitcoin realized volatility | Source: X @_Checkmatey_

Check counters the typical narrative surrounding Bitcoin’s volatility: “However, many people forget that Bitcoin is volatile upwards. Volatility up is good!” It assumes that the current augment in volatility is moderate and suggests that the market is still in the early stages of a bull market, not near the end.

A key tool in Check’s analysis is the MVRV Miniature-Term Holder Ratio (STH-MVRV), which he uses to gauge market sentiment and phases. According to Check, during stable uptrends, this indicator consistently finds support at 1.0 and resistance at 1.4. Stability persists as long as the ratio remains within these limits. “Only when it breaks above this level will things become volatile,” notes Check, which could signal a move toward bearish conditions.

MVRV short-term holder
MVRV short-term holder | Source: X @_Checkmatey_

Despite the sell-off that brought Bitcoin to 57,000. dollars, Check notes that this has not significantly affected the profitability of short-term holders. “The magnitude of unrealized losses was largely consistent with bull market corrections, calming fears of a strong market.”

He further highlights that several local top buyers sold their Bitcoins at rock-bottom prices in panic, which he interprets as favorable for the correction phase, serving to stabilize the market by shaking hands with feeble hands.

Expanding on his analysis, Check rejects criticism that Bitcoin’s volatility makes it a less profitable asset. He points to a chart comparing Bitcoin’s 30-day volatility to top-performing U.S. stocks, showing Bitcoin’s volatility is within a manageable range.

He further discusses the lower realized volatility of the SPY index, attributing it to the “overperformance of the Magnificent-7” which is offset by the underperformance of the other components.

Highlighting the structural aspects of the current “quiet and popular” phase of the market, Check offers a sophisticated perspective on how Bitcoin is moving on its path of maturation, balancing between its speculative origins and its potential as a mainstream financial asset.

He concludes: “Overall, Bitcoin’s uptrend in 2023-2024 looks quite structured, following a gradual rally-consolidation-rally pattern. However, as the charts above show, volatility tends to augment during consolidation, which can lead to instability.

At the time of publication, the price of BTC was $66,288.

Bitcoin price
BTC Price Recovers $66,000, 1-Day Chart | Source: BTCUSD on

Featured image created with DALL·E, chart from


Leave a Reply

Please enter your comment!
Please enter your name here