Bitcoin has slipped below $27,000 as short-term holders have reaped the largest gains since the all-time high set in November 2021.
The realized profit of short-term Bitcoin holders has skyrocketed lately
According to on-chain analytics firm Glassnode, short-term holders recently realized around $292 million in profit. The relevant indicator here is “Realized Profit”, which measures the total sum of profits (in USD) that investors are currently securing across the Bitcoin network.
This metric works by going through the on-chain history of each coin sold to see the last price transacted. If that previous sale price for a coin was lower than the price at which it is now being moved, then it is sold at a profit.
The realized profit indicator then adds this profit amount to its value and then repeats the process for all transactions on the BTC blockchain.
This indicator can also be applied to a specific market section such as an investor group. The entire bitcoin sector can be divided into two main groups of investors: the short-term holders (STHs) and the long-term holders (LTHs).
Here, the relevant group is the former, including all investors who have held their coins for less than 155 days. Holders who carry their coins longer naturally fall under the LTHs.
Below is a chart showing the data for Bitcoin STH realized gain over the last few years.
The value of the metric seems to have increased quite a bit over the past few days | Source: CryptoQuant
The Bitcoin STH realized profit metric used in the chart is the “company-adjusted” one, which means that transactions between the wallets owned by the same company have been excluded from the data (a company can be both a single investor and a group of be owners).
As can be seen from the chart, the indicator was at fairly low levels during the bear market, which makes sense as the prices covered in the 155-day period would be either greater than or almost the same as the current one if there weren’t many opportunities for STHs to make significant profits.
However, this trend changed when the rally began in January as STHs, which had been buying at the low bear market prices, were now suddenly making huge gains.
The metric depreciated when BTC price fell below $20,000 earlier this month, but with last week’s renewed strong bullish trend, STHs have started to realize some significant gains again.
The current reading of the metric suggests that STHs recently posted gains of around $292 million, the highest since November 2021, when Bitcoin posted its all-time high.
Such profit-taking by these investors can hurt the price, and it appears that the asset has already experienced the bearish effect of this as BTC has now fallen below the $27,000 mark.
BTC price
At the time of writing, Bitcoin is trading around $26,800, up 10% over the past week.
BTC has crashed on the daily chart | Source: BTCUSD on TradingView
Featured image of Kanchanara on Unsplash.com, charts by TradingView.com, Glassnode.com
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