Short-Term Bitcoin Investors Are Taking Profit After the Pump: Glassnode

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Cer­tain Bit­coin investors are sell­ing while they can after the pri­ma­ry cryp­tocur­ren­cy reclaimed $23,000 ear­li­er this month, accord­ing to Glassnode. 

The blockchain intel­li­gence provider’s lat­est report reviews recent on-chain behav­ioral pat­terns exhib­it­ed by both short and long-term holders. 

Exiting While They Can

The newslet­ter, post­ed on Mon­day, begins by exam­in­ing Bitcoin’s price, which have reclaimed “mul­ti­ple on-chain pric­ing models.” 

One mod­el includes the investor price – which reflects the aver­age acqui­si­tion price for all coins spent and dis­trib­uted by Bit­coin min­ers. Hav­ing over­come this mod­el at $17,400, the aver­age min­er has returned to a posi­tion of profitability.

The move has also returned many people’s Bit­coin back into the prof­it zone, with Per­cent Sup­ply in Prof­it surg­ing from 55% at $16,000 to 67% at $23,100. This was one of the sharpest spikes for Bit­coin prof­itabil­i­ty dur­ing a bear mar­ket that has ever occurred. 

Glassnode stat­ed that move­ments in this met­ric can be use­ful for iden­ti­fy­ing when a mar­ket recov­ery may be under­way. That said, move­ments of this size also incen­tivize Bit­coin hold­ers who have returned to prof­it to start real­iz­ing some of their gains. 

In par­tic­u­lar, the Per­cent­age of Short-Term Hold­er Sup­ply in Prof­it has returned above 97.5% – at which point investors “tend to seize the oppor­tu­ni­ty and exit at break-even or profit.”

“Giv­en this sub­stan­tial spike in prof­itabil­i­ty, the prob­a­bil­i­ty of sell pres­sure sourced from short term hold­ers is like­ly to grow accord­ing­ly,” said Glassnode. 

The data is already bear­ing this out: trad­ing vol­ume among short term Bit­coin hold­ers (those whose coins last move less than 6 months ago) has sky­rock­et­ed well past its long term declin­ing trend. Min­ers, too, have sold into the rally. 

“There­fore, the sus­tain­abil­i­ty of the cur­rent ral­ly can be con­sid­ered a bal­ance between inflow­ing and new­ly deployed demand, meet­ing the sup­ply drawn out of investor wal­lets by these high­er prices,” Glassnode continued.

Long Term Holders

While short-term hold­ers are sell­ing off, the num­ber coins that haven’t moved for over 6 months is grow­ing at a rate of 100,000 BTC per month. That means that HODLer con­vic­tion remains strong, even amidst a mar­ket rally. 

At cur­rent prices, the aver­age long-term hold­er is at rough­ly a break-even basis, mean­ing their coins are at the same price they bought in at. 

Last week, Glassnode not­ed that Bitcoin’s surge in volatil­i­ty this month could sig­nal the begin­ning of a cycli­cal bull market. 

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