Bitrabo Editorial
Recent on-chain analysis indicates that Bitcoin’s short-term holders have recently realized over 14 times more profits compared to losses.
Bitcoin’s Price Decline Amid Short-Term Profit Realization
A recent report from Glassnode highlights that short-term holders are cashing in on their investments. The crucial metric here is the “Realized Profit/Loss Ratio,” which measures the comparative volumes of profit and loss transactions among Bitcoin investors.
A ratio above 1 signifies that the average holder is selling their Bitcoin at a profit, while a ratio below 1 indicates that more holders are selling at a loss.
This analysis focuses on short-term holders (STHs), defined as those who acquired their Bitcoin in the last 155 days.
The chart below, provided by Glassnode, illustrates the trend of the Realized Profit/Loss Ratio for short-term holders over recent years.
The data shows that the profit/loss ratio for STHs fell into negative values early last month due to a sharp drop in Bitcoin’s price, leading to panic sales among those investors.
However, with the price of Bitcoin recovering, the profit/loss metric has turned back to positive, indicating that profit-taking activities among STHs are now approximately 14 times greater than their loss-taking activities.
This trend suggests that heightened profit realization by these holders often corresponds with local price peaks for Bitcoin, implying the recent dip could be linked to their profit-taking actions.
Conversely, if STHs start to capitulate, it may signal bottoming out opportunities, indicating that a reversal in the Realized Profit/Loss Ratio could hint at nearing lows for the cryptocurrency.
Additionally, Glassnode’s report discussed the situation for long-term holders (LTHs), who represent the remainder of the Bitcoin community. It appears that a significant portion of their holdings is currently at a loss.
This increase in losses among LTHs may be due to the fact that recent significant buyers now fall within this category, leading them to hold assets that are currently at a loss. Despite nearly 47.4% of LTH holdings being underwater, the overall scale of unrealized losses in this group is rather small.
Current Bitcoin Price
As of now, Bitcoin is trading at approximately $60,400, reflecting a decline of over 5% in the past week.