Rrecent data on string highlighted a significant trend: a wave of profit-taking by investors who have held bitcoin (btc) for less than five months.
As detailed in the latest data from CryptoQuant, this phenomenon is not just a random market movement, but an echo of patterns seen at the zeniths of previous bull markets.
Profit-taking among short-term bitcoin holders signals a shift in the market
According to CryptoQuant, the Spent Output Profit Ratio (SOPR), a key metric for assessing profits and losses from bitcoin transactions over a specific period, is showing a sharp rise indicating widespread profit-taking.
This trend among short-term holders to liquidate their holdings to make profits parallels historical market peaks and suggests a critical juncture for bitcoin.
crypto Dan, an experienced market analyst, emphasized the importance of this trend and stated: “This movement is something that only happens once every few years,” highlighting the uniqueness and possible consequences of current market trends.
$btc Short-term investors made huge profits.
“In relation to this adjustment, if we look at the SOPR, there was a big movement related to the taking of profits by short-term holders who had btc?src=hash&ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow”>#btc for less than 5 months.”
by @DanCoinInversor– CryptoQuant.com (@cryptoquant_com) March 18, 2024
New market forces at play: entry of ETFs set to rebalance the equation
While the SOPR metric could sound alarm bells reminiscent of past bull market peaks, the crypto landscape is supported by factors that could mitigate the traditional results of such profit taking.
Among them is the recent introduction of a btc spot exchange-traded fund (ETF). This new avenue for investing in bitcoin introduces a complex layer to market dynamics, potentially dampening any adverse effects of short-term holders' profit-taking activities.
Dan concluded by btc-short-term-investors-took-large-profits?utm_source=twitter&utm_medium=sns&utm_campaign=quicktake&utm_content=crypto-dan” target=”_blank” rel=”nofollow”>observing:
But considering the btc Spot ETF and possible additional inflows from institutions and individuals, it is difficult to judge it simply as a sign of the peak of a bull market. After a short-term correction period, it is very likely that we will see a new strong rise in 2024.
CoinShares Head of Research, James Butterfill, bitcoin-demand-shock-5be12c1738b3″ target=”_blank” rel=”nofollow”>provides an additional layer of analysis, suggesting an imminent “positive demand shock” for bitcoin. According to Butterfill, the delay in making spot bitcoin ETFs accessible to the Registered Investment Advisor (RIA) market, a sector that manages around $50 trillion in assets, is about to end.
With RIAs requiring three months of trading data before including new ETFs in their portfolios, the market is about to see a substantial influx of new investments into bitcoin. “If 10% of ARIs decided to invest 1% of their portfolios, this could generate approximately $50 billion in additional inflows,” Butterfill explained, highlighting the scale of the potential impact on the market.
Furthermore, the current supply and demand dynamics within the bitcoin market are skewed towards increasing demand versus decreasing supply.
Daily btc demand, driven by spot btc ETF trading and average new coin production, underscores a growing gap that ETF issuers are filling by tapping into the secondary market.
This scenario is evidenced by a dramatic decline in OTC desktop coin holdings, a direct consequence of ETF-driven demand, according to Butterfill.
Featured image from Unsplash, chart from TradingView
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