[DigitalToday reporter Jinju Hong (홍진주)] An analysis said bitcoin is showing signs of a rebound while building a base.

CoinPost, a blockchain media outlet, reported on Wednesday that on-chain analytics firm Glassnode said in its weekly report that bitcoin remains in a base-building phase but has recently begun testing an upper resistance line.

Glassnode said bitcoin reacted more strongly than other major assets such as stocks after U.S. inflation data came in below market expectations. It said bitcoin had traded without direction near recent lows over the past month, but the market has started responding to positive news again. It said such a rise on a single inflation indicator suggests selling pressure has been largely exhausted and buying interest is waiting for a catalyst.

It also cited changes in market structure. Glassnode said bitcoin’s correlation with U.S. stocks has weakened since winter, while its inverse correlation with the U.S. dollar has continued to strengthen. It said bitcoin is being traded not as an alternative to stocks but as an asset that tends to strengthen when the dollar weakens. It said the dollar’s direction and market liquidity conditions are increasingly likely to be important variables for prices going forward.

It also presented key price levels based on on-chain indicators. Bitcoin is above the realised price of about $53,000, which refers to the market-wide average purchase price, but is trading below the short-term holder cost basis of about $69,000, the average purchase price of investors who bought over the past five months. Glassnode said a strong market reaction is likely if bitcoin reaches that short-term holder cost basis. It said selling willingness among market participants is highest around the break-even point.

It said a clear recovery of that price level could strengthen the rebound. If it falls back from that range, it said the current boxed-in trading is likely to continue.

On supply and demand, Glassnode said there were signs that selling pressure has eased somewhat. It said last week it viewed long-term holder selling as one of the main reasons behind bitcoin’s decline, but in this report it said their selling has passed its peak and turned lower, and profit-taking has also cooled. It also noted that broad-based buying flowed in around June lows, absorbing selling pressure.

It also made clear it is not yet at a stage to conclude a full shift to an uptrend. Outflows from U.S. spot bitcoin ETFs have slowed sharply compared with the June peak, but there were days over the past week when large outflows occurred temporarily. That means it is difficult to say fund flows have fully recovered.

In derivatives markets, put option liquidations aimed at hedging downside risk pushed the put-to-call ratio down to the lowest level this year. However, the lack of sufficient spot buying to support it remains a burden.

Glassnode said a signal that could change market sentiment would be spot-led buying. It said prices need to break above the short-term holder average purchase price and hold that level on the back of spot buying for it to be seen as a signal of a trend recovery. If long-term holders step up selling to lock in losses again, or if prices fall back toward the realised price, it said the market could return to a boxed-in range.