According to a recent blog post by crypto analytics startup Glassnode, Bitcoin prices have been consolidating between $26.7K and $28.7K, pausing after several weeks of impressive performance. To assess investor confidence in the uptrend, Glassnode utilized a range of on-chain tools, including exchange flows, profit-taking, and coin holding times.
Glassnode observed that, over the past week, investors had increased the volume of coins deposited to exchanges, resulting in a net exchange flow increase of approximately 4.18k BTC – the largest net increase since the LUNA collapse in May 2022. This suggests that investors are taking profits off the table, as similar or larger net inflows during the last cycle aligned with major market volatility events, usually to the downside.
The analytics startup further analyzed the breakdown of coins sent to exchanges by Long-Term Holders (LTH) and Short-Term Holders (STH), examining which cohorts were taking profits. Glassnode found that both groups experienced an uptick in coins sent to exchanges, peaking at a total of 31k BTC this week. STH accounted for 92.5% of the total inflow volumes, with 65% of that volume being coins in profit. LTH, on the other hand, made up just 7.5% of the total deposit volume; however, 80% of their volume was in profit, marking the largest uptick since mid-2021.
In aggregate, Glassnode reported that the market has locked in $320 million/day in net profits on spent coins, the largest net profit-taking since the LUNA-UST project collapse in May 2022. However, the realized profits’ magnitude remains well below typical bull market levels. Additionally, the analytics firm noted that the severity of net losses has been decaying since July 2022, indicating a return to a more neutral gear and a transitional market structure.
In conclusion, Glassnode’s analysis suggests that as the Bitcoin market takes a break, profit-taking by investors, especially short-term holders, is heating up. Despite this, the majority of BTC appears to be relatively inactive on-chain, indicating that investors maintain confidence in the ongoing uptrend. Through the lens of coin lifespan, Glassnode posits that Bitcoin seems to be entering a transitional market period.
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