BTC holders do not seem to want to spend their coins, expecting the prices to become higher. The profit levels for long-term holders are between 50% and 75%.
Although the price of Bitcoin (BTC) recently hit a new all-time high, profit-taking levels are moderate. That suggests that the cryptocurrency is going through the initial stage of a major bullish run, the latest report from Glassnode states.
The analytical firm addresses the evolution of the Bitcoin market between October 25th and 31st. They note that the appreciation of the cryptocurrency in October reached a record high of 40%, although it temporarily fell below USD 60,000.
The Level of Bitcoin Spent and Profits Is Moderate
Measuring the profitability of Bitcoin through the SOPR (Spent Output Profit Ratio) indicator requires dividing the current price by the realized or effective price. The latter corresponds to the value of BTC the last time that it changed hands.
The aSOPR metric has been above one (1) since mid-August, with holders profiting. The so-called adjusted SOPR (aSOPR) discards transactions with coins less than one hour old. For that reason, Glassnode considers all holders when dealing with taking moderate profits.
The behavior of the current aSOPR is like that of the initial zone running from August to late October 2020, also with moderate sales and earnings. After that, the bullish run is more noticeable, and there are three zones where profit-taking increases.
Two of those zones are for sustained profits, between which there is a zone that shows maximum profit-taking. That happened in December 2020 after the price of Bitcoin exceeded the all-time high of December 2017.
The capitulation zone chart, from late May to late July 2021, shows BTC sales at a loss. In the current zone, moderate sales have been occurring since August, when there was an upward trend. The largest profit-taking within that range occurs with the latest all-time high.
The Bitcoin Unrealized Profit and Loss Metric
Another perspective on holder earnings is through net unrealized profits or losses (NUPL), according to Glassnode. That metric shows the BTC in the hands of long-term holders (LTH), which are between 50% and 75% in profit.
On four occasions, unrealized profits of LTH have been in that range. At the end of 2013, 2017 and 2020, the abovementioned range preceded an all-time high for Bitcoin.
In 2019, Bitcoin rebounded from the low of USD 3,000 it had reached at the end of 2018. Despite a mid-year boost, holders gave in to selling pressure, and there was a capitulation.
After a considerable correction in May, since October, there is a similar scenario of unrealized profits of LTH between 50% and 75%. Since they are willing to retain their coins, this could be the start of a bullish run.
Cryptocurrency analyst Willy Woo recently predicted that the price of Bitcoin in the long term would remain bullish. However, short-term holders (STH) recently showed a slight tendency to take profits.
By Alexander Salazar
