On-chain data shows that short-term holders of Bitcoin have recently moved more than 14 times more profit volume than losses.
Bitcoin Drops As Short-Term Holders Continue To See Profits
According to the latest weekly report from Glassnode, short-term holders have started taking profits again recently. The on-chain indicator of relevance here is “Realized Profit/Loss Ratio,” which, as its name suggests, tells us about how much profit and how much loss Bitcoin investors are currently carrying.
If the value of this metric is greater than 1, it means that the central holder in the network is moving his coins with full profit. On the other hand, the indicator being below this threshold suggests that loss is the best way to sell in the market.
In the context of the current article, the Realized Profit/Loss Ratio of only one segment of the BTC userbase is of interest: short-term holders (STHs). STHs refer to Bitcoin investors who bought their coins in the last 155 days.
Below is a chart shared by the statistics company in the report, which shows the trend in the Bitcoin Realized Profit/Loss Ratio of STH over the past few years.
The value of the metric appears to have seen a sharp surge in recent days | Source: Glassnode's The Week Onchain - Week 40, 2024
As shown in the graph, Bitcoin Realized Profit/Loss STHs fell into negative territory at the beginning of last month as the price of the cryptocurrency fell. This means that these investors were afraid to sell at a loss in the price drop.
As the stock price recovered from the bottom, however, the index retraced its path, taking positive values. The latter levels were much higher, where the volume of STH’s taking profits was almost 14 times that of those taking losses.
From the graph, it can be seen that the high profit taking of these investors usually coincides with local peaks of at least the value of Bitcoin, so the recent decline of the coin may be the result of all the profit recognition that this group recently participated in.
Conversely, capitulation from STHs can lead to downside, so when STH Realized Profit/Loss changes direction again, it may be a signal that the coin may be close to reaching a bottom.
In the same report, Glassnode also addressed the situation of long-term Bitcoin holders (LTHs), who make up the rest of the Bitcoin userbase. It would appear that the percentage of serving caught by the team has increased recently.
The trend in the profit and loss supplies held by the BTC LTHs | Source: Glassnode's The Week Onchain - Week 40, 2024
This recent rise could be a product of the fact that the top buyers are now part of this group, naturally bearing the losses at the moment. Despite 47.4% of LTH being underwater, however, the actual unrealized loss ratio held by the group is still significant.
BTC price
At the time of writing, Bitcoin is floating around $60,400, down more than 5% in the past seven days.
Looks like the price of the coin has been on the decline recently | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, chart from TradingView.com
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