Crypto Markets Analysis: Bitcoin’s Surge Moves Both Short- and Long-Term Holders Into Profitability

But the question remains whether short-term holders will sell or stay and become long-term holders.

AccessTimeIconJan 23, 2023 at 8:25 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

The price of bitcoin (BTC) has surged in recent weeks, helping both short- and long-term investors to profit, on-chain data shows.

According to analytics firm Glassnode, as of time of writing the percentage of short-term profiting BTC holders increased to 97.5%, its highest level since November. Bitcoin has also been profitable for long-term BTC holders, according to Glassnode.

"Long-term" is considered over 155 days while "short-term" is less than 155 days.

(Glassnode)
(Glassnode)


The Long Term Holder MVRV (market value to realized valued) ratio has risen above 1.0 for the first time in six months, indicating that the cost basis for long-term holders is now below the spot price of bitcoin.

(Glassnode)
(Glassnode)

Clearly, investors getting long (buying and owning an asset expected to appreciate over time) on BTC at a lower cost basis following a prolonged decline in BTC's price is driving this trend. But with over 97.5% of short-term supply now in profit, will newer BTC investors cash in on the move higher or maintain their positions, ultimately becoming long-term holders themselves? And what is the significance of either move?

Evidence from January 2018, April 2021 and November 2021 indicates that an increase in short-term supply in profit above 97.5% preceded sharp downturns in price. Are markets now headed in that direction?

Investors may also wish to scrutinize the stablecoin supply ratio (SSR) and the amount of bitcoin being sent to exchanges, among other indicators.

The SSR declines as investors send more stablecoins to exchanges relative to BTC. This trend indicates more capital being sent to exchanges for the purposes of acquiring more bitcoin. A similar metric to remember is the exchange reserve balance of stablecoins, because an increase indicates increased buying pressure.

The SSR has increased slightly since Jan. 9, while the exchange balance for stablecoins has declined, which may be concerning to investors.

The opposite holds true for the bitcoin exchange reserve balance. Bullish investors would not want to see bitcoin exchange balances rise because such an increase would suggest more investors are sending BTC to exchanges for the purpose of selling.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Glenn Williams

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.