On-chain data shows that short-term bitcoin holders have recently moved more than 14 times more profit volume than loss volume.
bitcoin has plunged as short-term holders have taken profits
According to the latest weekly report of glass nodeShort-term holders have started to take profits again lately. The relevant on-chain indicator here is the “Realized Profit/Loss Ratio”, which, as the name implies, tells us how the profit and loss volumes currently moved by bitcoin investors compare.
When the value of this metric is greater than 1, it means that the average network holder is moving their coins at a net profit. On the other hand, the fact that the indicator is below this threshold suggests that taking losses is the dominant form of selling in the market.
In the context of the current topic, the realized profit/loss ratio of only one segment of the btc user base is of interest: short-term holders (STH). STHs refer to bitcoin investors who purchased their coins in the last 155 days.
Below is the chart shared by the analytics firm in the report, showing the trend in bitcoin's realized profit-loss ratio for STHs over the past few years.
<img data-recalc-dims="1" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/10/Bitcoin-Sinks-to-60000-as-Short-Term-Holders-Make-Big-Gains.png" alt="Profit and loss ratio obtained from bitcoin STH” width=”2000″ height=”1152″/>
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 shown in the chart, bitcoin realized profits/losses for STHs had fallen into negative territory early last month as the cryptocurrency's price plummeted. This means that these investors had been afraid to sell at a loss due to falling prices.
However, with the asset's value recovering from the bottom, the indicator has also reversed its direction, assuming positive values. The latest levels have been especially high: the STH profit volume is approximately 14 times the loss volume.
From the chart, you can see that the high profit taking of these investors generally aligns with at least the local highs in the price of bitcoin, so the coin's latest drop may also be the result of all the taking of profits. gains that this cohort has been participating in recently.
Conversely, STH capitulation can lead to a bottom, so when STH realized profits/losses change direction again, it could be the sign that the coin may be close to hitting a bottom.
In the same report, Glassnode also talked about the situation of bitcoin long-term holders (LTH), who make up the rest of the bitcoin user base. It would appear that the percentage of supply held at a loss by the cohort has recently skyrocketed.
<img data-recalc-dims="1" loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/10/1728058205_517_Bitcoin-Sinks-to-60000-as-Short-Term-Holders-Make-Big-Gains.png" alt="bitcoin Loss Supply LTH” width=”2000″ height=”1152″/>
The trend in the profit and loss supplies held by the btc LTHs | Source: Glassnode's The Week Onchain - Week 40, 2024
This recent increase could be a product of the fact that the main buyers now belong to this cohort, which is naturally making losses at the moment. However, despite 47.4% of LTH supply being underwater, the actual magnitude of unrealized losses suffered by the group remains negligible.
btc Price
At the time of writing, bitcoin is trading around $60,400, a drop of more than 5% in the last seven days.
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Looks like the price of the coin has been on the decline recently | Source: BTCUSDT on TradingView
Featured image by Dall-E, Glassnode.com, TradingView.com chart
