Bitcoin Under $27k As Short-Term Holders Lock Record Profits
Bitcoin dropped below $27,000 as short-term holders took their biggest profits since the November 2021 all-time high.
Bitcoin short-term holder realized profit increased recently
According to data from on-chain analytics firm glassnode, short-term holders recently took about $292 million in profits. The relevant indicator here is “earned profit”, which measures the total amount of profits (in USD) that Bitcoin network investors are currently making.
This metric works by going through the on-chain history of each coin being sold to see its last traded price. If any currency’s previous selling price was less than the price it is moving at now, it is selling at a profit.
The realized profit indicator adds this amount of profit to its value and repeats the process for all transactions on the BTC blockchain.
This indicator can also be applied to a specific section of the market, such as a group of investors. The entire Bitcoin industry can be divided into two main groups of investors: short-term holders (STHs) and long-term holders (LTHs).
Here, the relevant group is first, including all investors who have held their coins since less than 155 days ago. Naturally, holders who carry their coins for longer than that fall under LTHs.
Below is a chart displaying Bitcoin STH realized profit data over the past two years.
The value of the metric seems to have spiked pretty high in recent days | Source: CryptoQuant
The Bitcoin STH realized profit metric used in the graph is “entity-adjusted”, meaning that transactions between wallets owned by the same entity have been excluded from the data (an entity can be a single investor and a group of holders). .
From the chart it is evident that the indicator was at very low values during the bear market, which makes sense as the covered prices over the 155 day duration would be higher or close to the same price as the current one, so there is no there would be many opportunities for STHs to make significant profits.
However, that trend changed once the rally started in January, when STHs that bought at low prices from the bear market now suddenly took some huge profits.
The metric fell in value when the price of BTC dipped below the $20,000 mark earlier this month, but with the new sharp uptrend last week, STHs have again started to take some significant profits.
The current value of the metric suggests that STHs recently made around $292 million in gains, the highest since November 2021, when Bitcoin recorded its all-time high price.
This profit-taking by these investors could hurt the price, and it may appear that the asset has already taken the bearish effect of this, as BTC has now dropped below the $27,000 mark.
At the time of writing, Bitcoin is trading around $26,800, up 10% over the last week.
BTC has plummeted on the daily chart | Source: BTCUSD on TradingView
Featured Image of Kanchanara from Unsplash.com, Charts from TradingView.com, Glassnode.com