The Bitcoin market is currently witnessing a remarkable phenomenon. As per recent data from Glassnode, a staggering 16.366 million BTC are now in the green, constituting 83.6% of the total circulating supply.
This milestone has not been observed since the dizzying heights of November 2021, a time when the cryptocurrency market was near its all-time highs.
But here’s the kicker: despite this upward trend, the scale of unrealized profits isn’t nudging long-term holders to sell. Seems like they’re playing hard to get, doesn’t it?
A Look at Investor Accumulation
Diving deeper, we see a pattern of robust accumulation among investors. The accumulation trend score, a metric that tracks changes in on-chain wallet balances, reveals a more intense pattern of accumulation in recent times, especially compared to earlier this year.
In the latest price expansion, this indicator lit up like a Christmas tree, indicating a strong accumulation mechanism. This has been instrumental in propelling the price by a whopping +39% in the past 30 days. Talk about skyrocketing!
Interestingly, there’s been a clear shift since late October. Investors across all wallet sizes have significantly increased their holdings, as denoted by the blue markers in various charts.
The year 2023 has seen several phases of net outflows, indicating that not all investor groups are singing the same tune.
This widespread growth in accumulation suggests a robust market performance, with the optimism around spot BTC ETFs adding to investors’ confidence in an upward trend.
The Profit Rebound and Its Implications
The surge in the percentage of BTC in profit is historically significant. The profitable supply has hit the 83% mark of total circulating supply, soaring well above the historical average of 74%.
Usually, when such levels are exceeded, it historically aligns with the early stages of a bullish “excitement phase” in the market. However, it’s crucial to differentiate between the amount of BTC in profit and the scale of unrealized profits.
The latter assesses the difference between the cost basis and the current exchange rate, and it’s a more critical variable when analyzing investor behavior.
While a large portion of the supply is in profit, the scale of unrealized profits has yet to reach the high levels typically associated with the heated stages of a bull market.
Currently, this metric trades around the all-time average of 49%, significantly lower than the extreme levels of 60%+ seen during past bullish excitement phases.
This scenario suggests that while a substantial portion of the supply is profitable, most of it has a cost basis only marginally lower than the current spot prices. In other words, investors might be in the green, but they’re not swimming in a sea of profits just yet.
As we steer through this market landscape, the focus shifts to the long-term holders (LTH). Their supply has been quite cyclical, with distinct phases of intense selling and holding patterns.
Throughout the bear market of 2022, the supply held by long-term holders showed significant resilience, echoing the tenacity of BTC holders despite growing losses.
This enduring spirit has kept the market from plunging into chaos, and it points to an ongoing tension in supply dynamics. The future seems to hinge on whether these investors will wait for even higher unrealized profits before exerting more selling pressure.
To sum up, the recent surge in Bitcoin prices has brought back the level of profitable BTC to where it was two years ago, following the market’s drop from the November 2021 highs.
However, the size of unrealized profits held within these coins remains moderate and is yet to push long-term holders into locking in their gains.
This landscape paints a picture of a market teetering on the edge of potential shifts, where the decision of long-term holders could significantly sway the market’s direction.
As always, in the ever-dynamic and sometimes whimsical world of cryptocurrencies, the only certainty is uncertainty.
Stay tuned, stay informed, and maybe, just maybe, keep a healthy sense of humor about the whole thing. Because, let’s face it, in the world of Bitcoin, today’s forecast is often tomorrow’s old news.
