In a recent report by Glassnode, the Bitcoin market has witnessed a surge in profitability, with the volume of Bitcoin supply in profit reaching levels last seen two years ago. The data reveals that over 83.6% of the Bitcoin coin supply is currently held in profit, marking the highest level since November 2021, near the all-time high (ATH) of that period.
Despite the impressive figures, the report suggests that the magnitude of unrealized profit held within these coins is relatively modest. The unrealized profit is measured as the difference between the spot price and the coin’s cost basis. This data indicates that, while there is significant profitability, it has not yet reached a level that would entice long-term holders to cash in their profits, keeping the overall supply tight.
Bitcoin Profitability Peaks
Bitcoin’s strong price performance continues, with the cryptocurrency trading near year-to-date highs and surpassing $37.9k this week. Currently, over 16.366 million BTC are held in profit, equivalent to 83.6% of the circulating supply. This aligns with the levels observed during the 2021 bull market highs.
The Glassnode report delves into investor accumulation behavior, using the Accumulation Trend Score to illustrate the current rally’s greater accumulation patterns compared to earlier in the year. This indicator signals a robust accumulation regime during the recent price expansion, supporting the cryptocurrency’s 39% spike over the last 30 days.
Notably, the report highlights a shift in investor behavior since late October, with holders of all wallet sizes experiencing a substantial uptick in their holdings. This widespread accumulation suggests growing confidence in the market’s positive trajectory, fueled by strong performance and increasing optimism surrounding a potential Bitcoin ETF.
Examining market profitability from a statistical standpoint, the report notes that the percentage of the supply held in profit has reached 83%, surpassing the all-time mean value of 74% and approaching the higher band of +1 standard deviation at 90%. Historically, when this indicator trades above the upper band, it signals the early stages of a bull market’s “Euphoric phase.”
Long-Term Holders Stand Strong in Bitcoin Boom
The report also introduces tools to analyze unrealized profit, emphasizing its significance in understanding investor behavior and USD-denominated profit positions. While a significant volume of the supply is in profit, the magnitude of unrealized profit remains below historical highs seen in previous euphoric phases of bull markets.
Intriguingly, the report highlights the increasing divergence between supply held by long-term holders and short-term holders. Long-term holder supply has continuously reached new all-time highs, while short-term holder supply has declined to effectively a new all-time low. This divergence suggests long-term holders are becoming increasingly reluctant to part with their holdings, possibly waiting for the market to reach an all-time high new price before considering significant distribution.
However, the Glassnode report provides a comprehensive analysis of Bitcoin market dynamics, shedding light on current profitability levels, investor behavior, and potential future market trends based on historical cycles.
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