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Bitcoin Likely to Become More Volatile After Entering $70K–$80K 'Air Pocket'
Low supply concentration in this range may lead to heightened volatility.
What to know:
- Less than 2% of bitcoin's supply exists between $70,000 and $80,000, creating a thin liquidity zone known as an "air pocket."
- Historically, bitcoin tends to revisit and consolidate in previously skipped price ranges before establishing a new trend.
- Approximately, 25% of the bitcoin supply is sitting at a loss.
The bitcoin (BTC) price is likely to become more volatile after dipping below $75,000 twice in the past week as it extends its drop from the all-time high of $109,000 reached on Jan 20.
That's taken it into what Glassnode shows as an “air pocket” between $70,000 and $80,000 created after the largest cryptocurrency soared following President Donald Trump's election victory in November.
STORY CONTINUES BELOW
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The largest cryptocurrency climbed to over $100,000 from $70,000 after the vote without ever revisiting its starting point. Historically, when bitcoin rallies without consolidating at key levels, it often returns to retest them later. This lack of price interaction implies low supply, increasing the likelihood of rapid movement.
One way of showing this is to look at bitcoin's unspent transaction output (UTXO), which represents the amount of bitcoin received but unspent, i.e. still available for use in transactions.
The UTXO Realized Price Distribution (URPD) shows the prices at which existing bitcoin UTXOs last moved. In this version, each holder’s average acquisition price is used to sort their full balance into the appropriate price bucket.
In order to establish a sustainable move — either higher or lower — bitcoin will likely need to consolidate within this "air pocket" range. As illustrated in the chart, less than 2% of total supply sits here, suggesting that price action in this region could remain volatile due to the lack of supply.
Around 25% of bitcoin's supply is currently held at a loss, primarily by short-term holders who bought within the last 155 days.
James Van Straten
James Van Straten is a Senior Analyst at CoinDesk, specializing in Bitcoin and its interplay with the macroeconomic environment. Previously, James worked as a Research Analyst at Saidler & Co., a Swiss hedge fund, where he developed expertise in on-chain analytics. His work focuses on monitoring flows to analyze Bitcoin's role within the broader financial system.
In addition to his professional endeavors, James serves as an advisor to Coinsilium, a UK publicly traded company, where he provides guidance on their Bitcoin treasury strategy. He also holds investments in Bitcoin, MicroStrategy (MSTR), and Semler Scientific (SMLR).
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