Despite a choppy and flat market, Long-Term Bitcoin Holders (LTH) remain resilient, opting to continue accumulating Bitcoin (BTC) rather than selling, as revealed in the latest report by analytics firm Glassnode.
In contrast, Short-Term Holders (STH) have faced losses amid the market downturn, though some metrics indicate a possible overreaction.
Meanwhile, Bitcoin’s market dominance has been on the rise.
Prices Remain Flat, but Long-Term Holders Continue HODLing
Glassnode researchers noted a significant reduction in spending by LTHs, with their supply increasing at a rapid pace. The report highlights that “HODLing behavior is significantly outpacing spending behavior.”
Moreover, Long-Term Holders have been consistently locking in $138 million in daily profits. Analysts suggest that this LTH sell-side pressure indicates the amount of daily capital inflows required to absorb supply and maintain stable prices.
Despite the market’s volatility, prices have generally remained flat over the past few months, suggesting a form of equilibrium is being reached. The report also examined the Realized Profit/Loss Ratio, finding that while it has decreased from its peak, it remains elevated, indicating that long-term investors are reducing their profit-taking activities.
The report further notes that the Long-Term Holder SOPR (Spent Output Profit Ratio) reveals an average profit margin of +75%, with LTH-SOPR remaining high, suggesting a cooling off in profit-taking behavior.
Short-Term Holders Face Challenges
The report also assessed the financial stress experienced by recent buyers and short-term holders. The STH-MVRV (Market Value to Realised Value) metric indicates that new investors are now holding an unrealized loss, while the STH-SOPR shows some realized loss-taking activity.
Glassnode argues that the market may be at a decision point, with prices just below the comfort zone for STHs. While brief periods of unrealized losses are common in bull markets, prolonged periods could trigger panic among investors and potentially lead to a more severe bearish trend.
The report suggests that new investors’ emotional responses, driven by significant unrealized profits or losses, can lead to overreactions, forming local and macro market tops or bottoms.
Bitcoin’s Dominance Increases as Ethereum’s Falls
Since November 2022, Bitcoin’s market dominance has surged from 38% to 56% of the total digital asset market. In contrast, Ethereum’s dominance has fallen by 1.5% and has remained relatively flat over the past two years.
Additionally, stablecoins and altcoins have experienced more significant declines in market share, with decreases of 9.9% and 5.9%, respectively. Glassnode also observed net positive capital inflows for Bitcoin, Ethereum, and stablecoins, indicating continued investor interest in these assets.