On-chain data shows the Bitcoin short-term holders have recently moved over 14 times as much profit volume as the loss one.
Bitcoin Has Plunged As Short-Term Holders Have Been Realizing Gains
According to the latest weekly report from Glassnode, the short-term holders have started taking profits again recently. The on-chain indicator of relevance here is the “Realized Profit/Loss Ratio,” which, as its name implies, tells us about how the profit and the loss volumes being moved by Bitcoin investors currently compare.
When the value of this metric is greater than 1, it means the average holder on the network is moving their coins at a net profit. On the other hand, the indicator being under this threshold suggests loss-taking is the dominant form of selling in the market.
In the context of the current topic, the Realized Profit/Loss Ratio of only a segment of the BTC userbase is of interest: the short-term holders (STHs). The STHs refer to the Bitcoin investors who purchased their coins within the past 155 days.
Below is the chart shared by the analytics firm in the report, which shows the trend in the Bitcoin Realized Profit/Loss Ratio for the STHs over the last few years.
The value of the metric appears to have seen a sharp surge in recent days | Source: Glassnode's The Week Onchain - Week 40, 2024
As displayed in the graph, the Bitcoin Realized Profit/Loss for the STHs had dropped into the negative territory early last month as the price of the cryptocurrency had crashed. This means that these investors had been scared into selling at a loss by the price plunge.
With the asset’s value recovering since the bottom, though, the indicator has also reversed its direction, assuming positive values. The latest levels have been especially high, with the STHs’ profit-taking volume being around 14 times the loss-taking one.
From the graph, it’s visible that high profit-taking from these investors generally aligns with at least local tops in the Bitcoin price, so the coin’s latest drop may also be a result of all the profit realization that this cohort has recently been participating in.
In contrast, capitulation from the STHs can lead toward bottoms, so when the STH Realized Profit/Loss switches direction again, it could be the signal that the coin may be close to reaching a low.
In the same report, Glassnode has also talked about the situation of the Bitcoin long-term holders (LTHs), who make up the rest of the Bitcoin userbase. It would appear that the percentage of supply held in loss by the cohort has spiked recently.
The trend in the profit and loss supplies held by the BTC LTHs | Source: Glassnode's The Week Onchain - Week 40, 2024
This recent spike could be a product of the fact that the top buyers now belong to this cohort, who are naturally holding a loss right now. Despite 47.4% of the LTH supply being underwater, though, the actual scale of unrealized loss held by the group is still negligible.
BTC Price
At the time of writing, Bitcoin is floating around $60,400, down more than 5% over the last seven days.
Looks like the price of the coin has been on the decline recently | Source: BTCUSDT on TradingView