Long-term Bitcoin holders earn an average of 55% of their profits
On-chain data shows that long-term Bitcoin holders (so-called HODLers) currently have an average unrealized profit of 55%. The metric of interest here is the Net Unrealized Profit/Loss (NUPL), which tracks the difference between the unrealized profit and loss currently held by Bitcoin investors.
By "unrealized", we mean that the profit or loss has not been reaped because the investor holding the asset has not yet transferred their BTC to the Blockchain. Once the holder eventually transfers the Token, the profit/loss they hold is "realized".
In the context of the current discussion, only NUPL in a specific market segment is relevant: long-term holders (LTH). LTH is a Bitcoin holder who has kept their Bitcoin dormant on the network since at least 155 days ago.
These are the "BCD hands" in the market, who are known to hold during both rising and downtrends and will only sell during major market events.
"This includes periods when the market sets a new ATH, around the top and bottom of the cycle, and periods when the market structure changes significantly (such as Mt Gox, Halving, and now the launch of Spot ETFs)," the analyst firm explains. ”
Figure 1 chart shows the historical trend of Bitcoin LTH NUPL in this asset. With the significant spike in Crypto AssetsSpot prices, Bitcoin LTH NUPL has risen over the past few months.
"This indicator reached 0.55 this week, which is a meaningfully positive figure that gives long-term investors an average of 55% of unrealized profits," the report states. Interestingly, Bitcoin has seen some resistance near this level in the past.
As highlighted in the chart, the bulls had trouble during August 2012, June 2016, July 2019, and August 2020. In all of these cases, the peaks that eventually formed were only local tops, except in July 2019, when the rebound of the recovery cycle reached a peak that BTC could not surpass for quite some time.
Generally, investors who make a profit are more likely to sell their Tokens. The higher the yield they hold, the more attractive profit-taking will be. Therefore, it is not surprising that LTH, which holds huge profits, has led to selling pressure in the market in previous cycles.
As its supply data indicates, LTH has indeed been involved in some sell-offs recently.
Since hitting an all-time high in November, the supply of Bitcoin LTH has now dropped by 75,000 BTC, while the opposite group, short-term holders (STHs), has naturally gained some share. "While 75k BTC is a meaningful number, it should also be viewed in the context of the total LTH supply accounting for 76.3% of the Money Supply in circulation," the report said. ”
Bitcoin has continued its recent sideways trend over the past day and is currently hovering around $42,600.
(Source: Keshav Verma)
