Research Summary
The report discusses the current state of Bitcoin, noting that over 83.6% of the Bitcoin supply is now held in profit, the highest level since November 2021. However, the magnitude of unrealized profit remains modest, insufficient to motivate long-term holders to sell. The report also highlights the increasing divergence between the supply held by long-term and short-term holders, with the former reaching new all-time highs and the latter declining to new lows.
Key Takeaways
Bitcoin’s Profitability and Accumulation Patterns
- High Profitability: Over 83.6% of the Bitcoin supply is now held in profit, the highest level since November 2021. This is due to Bitcoin’s strong price performance, trading near year-to-date highs and pushing over $37.9k.
- Accumulation Patterns: The report notes a robust accumulation regime during the recent price expansion, with the price spiking +39% over the last 30 days. This is supported by the Accumulation Trend Score, which shows greater accumulation patterns than other rallies this year.
Unrealized Profit and Investor Behavior
- Unrealized Profit: Despite the high volume of Bitcoin held in profit, the magnitude of unrealized profit remains modest. This is measured as the delta between the spot price and the coins’ cost basis. The report suggests that this is insufficient to motivate long-term holders to sell, keeping the overall supply relatively tight.
- Investor Behavior: The report highlights a divergence between the supply held by long-term and short-term holders. Long-term holder supply has been hitting new all-time highs, while short-term holder supply has declined to new lows. This indicates that existing holders are increasingly unwilling to part with their holdings.
Market Sentiment and Future Outlook
- Market Sentiment: The report introduces a new tool for tracking market sentiment, considering the relative position of the spot price and long-term holder cost basis. It identifies four phases: Capitulation, Transition, Equilibrium, and Euphoria, each associated with different investor behaviors.
- Future Outlook: The report suggests that the market is currently in the “Equilibrium Phase,” following a recent rally above $37.1k. This phase is characterized by a balance between light in-flow demand, lighter liquidity, and underwater holders from the previous cycle.
Actionable Insights
- Understanding Accumulation Patterns: The report’s findings on accumulation patterns could be useful for understanding market trends. Investors may want to monitor these patterns to gauge market sentiment and anticipate potential price movements.
- Monitoring Unrealized Profit: The magnitude of unrealized profit could be a key indicator of investor behavior. Investors may want to keep an eye on this metric to understand when long-term holders might be motivated to sell.
- Utilizing Market Sentiment Tools: The new tool introduced in the report for tracking market sentiment could be valuable for investors. By understanding the different phases and associated investor behaviors, investors may be better equipped to navigate the market.
