Bitcoin Retains Profitability Amid Stagnation: Glassnode Report
Summary:
Despite stagnant Bitcoin price action, analytics firm Glassnode's newsletter suggests the cryptocurrency remains profitable, with over 87% of the circulating supply held at a profit. These findings contradict some reactions to Bitcoin's recent price dip and fears of crumbling support trendlines. Even with this, short-term holders are not preparing for a massive sell-off at current prices, indicating that Bitcoin is in a consolidation phase rather than capitulation.
Despite an extended period of stagnant Bitcoin (BTC) price performance, new data suggests the cryptocurrency remains highly profitable. This emerges in the latest release of prominent analytics company Glassnode's weekly newsletter 'The Week On-Chain', published on June 18, aiming to dispel common misconceptions about investors' unrealized losses.
While Bitcoin's value may seem to be stuck in a pattern, this doesn't mean the returns for long-term holders ("hodlers") are diminishing significantly. Described as a period of 'balance establishment', Glassnode indicates numerous on-chain metrics that suggest Bitcoin is in a phase of consolidation rather than capitulation.
The report suggests that when Bitcoin's price remains flat, it often leads to a sense of indifference or boredom among investors, this seeming to be the prevailing sentiment across all Bitcoin markets at the moment. The report goes on to note that Bitcoin prices are stabilizing within a known trading bracket. It also notes that over 87% of the cryptocurrency in circulation is held profitably against acquisition costs lower than the current price.
Taking into consideration the Market Value to Realised Value (MVRV) metric, the research indicates that on average, holders of Bitcoin have seen their investment increase by more than 120% against its purchase price in USD terms. This suggests the macro uptrend of Bitcoin's value remains intact as the precedent one-year average value for MVRV is currently 86%.
This optimistic view contrasts some reactions to this week's dip in Bitcoin's price. There are lingering worries about the crumbling of support trendlines and the potential resurgence of multi-month lows. One critical aspect now under scrutiny is the combined purchase price for Bitcoin's fleeting investor base, labelled as short-term holders (STHs). The recent figures from statistic platform Look Into Bitcoin places the cost base for STHs at $64,000.
Despite this, Glassnode's report asserts that these investors are not gearing up for a full-scale sell-off at the current prices, even as their unrealized gains diminish. It goes on to estimate that around +17.4k BTC/day are being transferred to exchanges by short-term holders, a figure significantly lower than the peak of +55k BTC/day witnessed in March when the market reached a soaring $73,000 all-time high.
A reminder to readers which punctuates this report: any trading or investment decisions should be made after careful consideration and research as they inherently bear risk.
Published At
6/19/2024 9:51:18 AM
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