- The recent rally in BTC price has brought profits to many holders.
- However, many holders are more inclined to sell than to hold.
In the first 30 days of 2023, Bitcoin’s price increased significantly, causing many of its holders to hold unrealized gains. However, as the price of BTC consolidated and traded in a tight range since early February 2023, on-chain indicators suggested that a possible change in market trend could be underway.
Read Bitcoins [BTC] Price prediction 2023-24
Glassnode’s aforementioned report evaluated the spending habits of large, small, long-term, and short-term BTC holders to uncover behavioral patterns as market trends shifted.
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According to Glassnode, the recent surge in BTC price has prompted many of its holders to post profits on their investments. By analyzing BTC’s Realized Profit/Loss Ratio, Glassnode examined the balance between gains and losses among BTC holders to identify shifts in dominance in the market.
She noted that after BTC price fell sharply from its all-time high in November 2021, a regime dominated by losses plagued the market. This caused the leading coin’s realized profit/loss ratio to drop below one.
However, the recent price increase represented the first sustained period of profitability since April 2022. According to Glassnode, this indicated a possible shift towards a profitability-dominated market trend.
Source: Glassnode
Additionally, Glassnode assessed BTC’s net unrealized gain/loss (NUPL) ratio, noting that the recent spike in the leading coin’s spot price had pushed the market back into a state of unrealized gains, with the average holder now in positive territory .
Considering the historical performance of this metric, Glassnode said:
“When comparing the duration of the negative NUPL across all past bear markets, we observe a historical similarity between our current cycle (166 days) and the 2011-12 (157 days) and 2018-19 (134 days) bear markets. The 2015-16 bear market remains stellar in terms of bear market duration, experiencing an unrealized loss regime almost twice as long as the runner-up (2022-23 cycle).
Source: Glassnode
Hold or sell?
Whether the market is trending towards hodling or selling to turn a profit, Glassnode looked at the metric of BTC’s adjusted reserve risk. This metric provides insight into the behavior of long-term BTC holders. It measures the balance between the general desire to sell and the actual sale of dormant coins.
As the metric approaches its equilibrium position, with 55% of all trading days below its current value, a change in market trends may be underway. This suggests that the cost of holding BTC is falling while the desire to sell is increasing.
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Historically, when the metric crosses its equilibrium position, it signals a shift from a holding-oriented market to one focused on profit realization, with capital migrating from long-term holders to newer investors and speculators.
Source: Glassnode
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