As Long Holders Still Cash Out, Can Bitcoin Break Through Resistance?
Original title: Taking Profit
Original author: Checkmate, Glassnode
Original compilation: Akechi, Annie
As the Bitcoin market encounters resistance at a new all-time high of $73,000, long-term holder groups have increased their selling efforts, with the market now seeing realized profits of over $2.6 billion per day.
Summary
· Bitcoin price has corrected 15.4% from its all-time high of $73,000 , as low as $61,000. This price action is very similar to the previous 2018-2021 cycle.
· Multiple on-chain indicators indicate an increase in realized profit trading, with daily realized profits exceeding $2.6 billion amid the current market headwinds.
· There are some similarities between the performance of the entire Bitcoin market and its previous breakthroughs to all-time highs. This similarity is especially related to the selling pressure brought by the long-term holder group.
Bitcoin markets are starting to slow down after a strong uptrend over the past two weeks and continue to correct and consolidate above $61,000. BTC price is down 15.4% from its new all-time high of $73,100 on March 13, and fell to a local low of $61,800 on March 20 before recovering to $70,000.
If we look at the price performance (in black) since the all-time high in April 2021 (the point at which we believe bear market sentiment started to emerge) what the market scenario looks like Shown exponentially, we can see striking similarities to the previous cycle (blue). Relative to the 2018-2021 cycle, the market has reacted and performed much the same as it did in December 2020, both in terms of duration and distance from the April 2021 peak.
In previous reports, we explored how the Bitcoin market has Several statistically significant changes in indicators were achieved in terms of unrealized profits in supply. Among them, indicators such as MVRV and AVIV ratio reach +1 standard deviation compared to their long-term average.
Past performance has always been the focus of attention. Facts have also proved that when the current market begins to encounter a certain degree of resistance, some investors begin to seek to cash in profits and exit their original stage.
A total of 2 million as prices fell from all-time highs to recent lows of $61,200 BTC changes from "profit" status to "loss" status. This shows that the number of Bitcoins being traded at a new high base cost is increasing, which is reshaping the current Bitcoin transaction costs.
As the market rebounded to $66,500, approximately 1 million Bitcoins returned to "profitable" status. And based on these two observations, we can determine the following facts:
· The base cost of approximately 1 million BTC is between $61,200 and $66,500.
· There are approximately 1 million more BTC with a base cost between $66,500 and the all-time high of $73,200.
This batch of Bitcoin supply is one of the larger "supply clusters" encountered during the correction from the highs since the 2022 lows. This large " The emergence of "supply clusters" indicates that on-chain Bitcoin transactions have begun to accelerate in recent months.
Cash out realized profits
It can be seen that the underlying cost of these 2 million BTC is currently over $61,200, and most of them have recently changed hands, indicating that the previous owners have sold these Bitcoins to realize their profits. The chart below shows a series of variations of the SOPR indicator that we use to describe this profit taking behavior.
The SOPR indicator describes the average realized profit and loss multiple locked in by the group it indicates (while its "sibling indicator" MVRV is used to measure the average future profit and loss of investors. achieve profit and loss). At present, all four of its derivative indicators have been pushed to relatively high levels, and among them, the derivative indicator of entity adjustment is also close to the level at the peak of the bull market in 2021. This indicates that the volume and magnitude of profit realizations in the Bitcoin spot market are accelerating.
When Bitcoin price reached an all-time high of $73,200, more than 26 Billions of dollars in realized profits have been realized through on-chain transactions. Approximately 40% of realized profits were pocketed by a group of long-term holders, which also included investors who withdrew their funds from the GBTC Trust.
The remaining $1.56 billion in realized profits is held by short-term holders, considering that traders take advantage of both incoming liquidity and market momentum. factors, we can see that realized profits for both groups have reached similar levels to the peak of the 2021 bull market.
We can see that relative to all realized profit transactions, long-term holders Dominance is increasing. And as the market breaks through new all-time highs, there is a corresponding increase in spending from long-term holders.
Finally, we can check out a rather interesting chart, which is Time and varying levels of activity map supply clusters in the current market. We've highlighted in blue the key breakouts that preceded Bitcoin's price to new all-time highs, and thus the clear shift they created as they drove market supply to white heat.
The warm colors in the chart indicate that a large portion of dormant supply has begun to enter the trading market, change hands, and be revalued to the current spot price. We can notice from this that this is often a characteristic that appeared when the previous Bitcoin bull market entered the "euphoria" stage. And so far, a situation very similar to history is happening again.
From this, we can conclude that rising prices tend to activate more dormant supply, causing older illiquid supply to reawaken and enter circulation. This reflects a wealth transfer event where long-term holders dump their Bitcoins to cash in on profits and, in turn, meet a wave of new inflows of demand.
Summary
The current Bitcoin market has rebounded above $73,000, which has triggered an increase in transactions by long-term holders to cash out their profits. At the current time, the market is currently making over $2.6 billion in realized profits per day, and this high volume of profits indicates that many investors have begun selling their chips and seeking realized profits. We should point out that this is by no means an atypical market behavior and is very close to the market pattern we have observed during all previous Bitcoin price breaks to all-time highs.
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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