Friday, January 28

Bitcoin holders keep making money despite correction

Key facts:
  • Long-term holders have sold 6% of the accumulated supply since March.

  • Supply in the hands of short-term holders fell 12%, since April.

The bitcoin market has continued the downtrend that began on November 10, despite the fact that short and long-term holders have a greater part of their supply in profit. This is one of the conclusions of the recent Glassnode report on the bitcoin market.

The study also compares the variation of the BTC in profit of the short and long-term holders, and detects an increase in the benefits of both segments compared to last September.

The fall in price has deteriorated market sentiment, although the current correction, which began after the all-time high on November 10, is among the least severe in 2021, it states. the study. Intensive sales in January, February and April led to drops of up to 24%, while the correction that followed the all-time high in April this year led to a drop of 54%.

The following graph represents all the corrections that have occurred since 2020. As can be seen, each time the price falls, the area shaded in pink indicates the magnitude of the decrease in the price of bitcoin. Compared, 2020 price drops were deeper than in 2021.

Bitcoin fixes in 2020-2021. Source: Glassnode.

It is also observed that the recent correction in November is quite moderate compared to the one that occurred in the second quarter of 2021.

A test for short-term bitcoin holders

In Glassnode’s previous analysis, commented on by CryptoNews last week, the effective price of bitcoin for short-term holders (STH) was at $ 53,000 and was very close to the market price. By Sunday, November 28, bitcoin’s spot price had hit a low near $ 53,400.

The study maintains that this price level constitutes a support for the price of bitcoin when it comes down, as it happened last September and in November, in the following graph.

On-chain cost basis for short-term holders. Glassnode font.

In that last test of the support level indicated by the effective price, the price of bitcoin rebounded, and by Monday 29 (outside the limits of the chart) an increase was registered to $ 57,900.

Observing profit and loss on-chain

Near the lows that occur in bull markets, major buyers tend to capitulate and experience lossessays the study. Recovery can occur once losing participants auction off their funds, the report asserts.

The graph below shows that earnings (in green) declined in November, signaling reduced profit taking and greater investor conviction.

Profit and loss on chain until 30-28-2021. Source: Glassnode.

On the other hand, the actual losses (in pink) are comparable with those that occurred during the intensive sales of April and July, of about USD 800 million per day. However, these losses remain well below those recorded in May this year.

Strong belief among short-term holders

Specifically for STHs, retained BTC earnings declined in November and approached the limit of profitability. At this point of the limit of profitability, short-term holders put their conviction to the testsays the report.

While in this borderline situation, the market is in a better position than it was during last September’s correction, Glassnode notes. The percentage of supply that is in profit grew from 5.78% to 9.20% since September, while the proportion of STH supply that is in loss decreased from 12.3% to 9.6%.

Long-term behavior of holders

As for long-term holders (LTH), they have shown a moderate sales rate, from the moment they reached an accumulation peak of 13.5 million BTC.

Supply of bitcoin in the hands of long-term holders. Source: Glassnode.

This record accumulation began in March of this year. Sales began in October and LTHs distributed 5.8% of the accumulated, approximately 150,000 BTC. Some 13.35 million BTC remain in the hands of these “strong hands” holders.

From the on-chain data, Glassnode deduces that the BTC in profit in the hands of the LTH, rose from 72.3% to 75.8% of the currency. Meanwhile, the BTC in losses controlled by these holders, decreased from 9.65% to 5.80% of working capital.

In April of this year, approximately 68% of bitcoin money was held by LTHs. According to Glassnode, in eight months, this segment of holders has incorporated an additional 13.6% of the circulating of BTC under its control, with which it now owns almost 82% of the BTC in circulation.

The November bitcoin price correction is the most recent in the current cycle. Source: TradingView.

The fact that the USD 53,000 level has been maintained as support is key to the continuity of the bull market, the study maintains. It also states that the increase in BTC earnings in the hands of short and long-term holders is a favorable factor for the price evolution.

In the fall in the price of bitcoin of 7% in November, a fact reported by CriptoNoticias, a minimum of USD 53,724 was registered, according to the price index of this medium. Despite the decline in the price, at the current price of USD 56,335, bitcoin registers an appreciation of 91.65% in 2021, at the time of writing this note.