As the Bitcoin market encounters resistance at a new all-time high of $73,000, the long-term holder group has increased their selling efforts, with the market now recording over $2.6 billion in realized profits per day
Summary
Bitcoin prices have corrected 15.4% from an all-time high of $73,000 to 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 profit-realized transactions, with daily realized profits exceeding $2.6 billion amid the current market headwinds.
The performance of the overall Bitcoin market has some similarities to its previous breakout of all-time highs, especially related to the selling pressure brought by the long-term holder group.
The Bitcoin market is starting to slow down after a strong uptrend over the past two weeks and continues to correct and consolidate above $61,000. Bitcoin prices are down 15.4% from a new all-time high of $73,100 set on March 13 and fell to a local low of $61,800 on March 20 before recovering to $70,000.
If we index the market scenario by price performance (black) since the all-time high in April 2021, the point at which we believe bearish sentiment started to emerge, we can see how it compares to the previous cycle (blue significant similarities in color). 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 a previous report, we explored how the Bitcoin market achieved several statistically significant metric changes in terms of unrealized profits on its supply. Among them, indicators such as MVRV and AVIV ratio reach +1 standard deviation compared to their long-term average.
Past performance has been the focus. Facts have also proved that when the 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 Bitcoins moved from "profit" to "loss" status as the price fell from an all-time high to a recent low of $61,200. This indicates that the number of Bitcoins being traded at a new high base cost is increasing, which is reshaping Bitcoin’s current 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 Bitcoins ranges from $61,200 to $66,500.
Another roughly 1 million Bitcoins have an underlying 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. The emergence of this large "supply cluster" indicates that on-chain Bitcoin trading has begun in recent months. accelerate.
Cash out realized profits
As can be seen, the underlying cost of these 2 million Bitcoins 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 evaluate the average unrealized profit and loss of investors). 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 reached an all-time high of $73,200, more than $2.6 billion in realized profits had been cashed out through on-chain transactions. Approximately 40% of realized profits were pocketed by a group of long-term holders, which also included investors who withdrew funds from the GBTC trust fund.
The remaining $1.56 billion in realized profits is held by short-term holders. Considering the two factors of traders taking advantage of inflow liquidity and market momentum, we can see that the realized profits of these two groups have reached as much as Similar extent to the 2021 bull market peak.
We can see that the dominance of long-term holders is increasing relative to all realized profit trades. 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 that plots the supply clusters in the market right now by time and varying levels of activity. 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 warmer portion of the chart indicates 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, allowing older illiquid supply to reawaken and enter circulation. This reflects a wealth transfer event – long-term holders dumping their Bitcoin in order to cash in profits and, in turn, satisfy a wave of new inflows of demand.
Summarize
Bitcoin markets have now rebounded above $73,000, triggering an increase in trading by long-term holders cashing in profits. At present, the market has realized profits of more than 2.6 billion US dollars per day. This high profit volume indicates that many investors have begun to sell chips and seek 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.
This article is reprinted with permission from: "MarsBit"
Original author: Checkmate, glassnode
Edited by: Akechi, Annie
