Bitcoin long-term holders are nearing 350% unrealized profits, particularly as prices move toward $100,000. Historical trends suggest that this profit level could trigger sell-offs. However, trader sentiment indicates skepticism about sustained price elevation, citing liquidity concerns and potential downside risks.
Bitcoin long-term holders (LTHs) are on the verge of reaching a significant level of unrealized profits that have historically triggered sell-offs. This level is becoming particularly relevant as Bitcoin prices clamber towards a six-figure mark, around $100,000. Onchain analytic firm Glassnode has flagged this potential sell-off risk as they analyse data and trends.
According to a recent newsletter from Glassnode titled “The Week Onchain,” LTHs, defined as those holding Bitcoin for over six months, are currently sitting on unrealized profits nearing 350%. The firm notes that such a profit level has typically prompted LTHs to start selling their assets. There’s an expectation that as Bitcoin approaches these heights, many holders will be tempted to cash in.
When observed in a historical context, there’s a pattern where the LTH group tends to initiate profit-taking once their unrealized profit margins exceed 350%. Specifically, Glassnode anticipates that the average LTH will hit this threshold right around the $99,900 mark. Consequently, traders should be bracing for a potential uptick in market selling pressure as it approaches this crucial price point.
Adding to the tension, Bitcoin’s recent rise to around $97,500—its highest point since February—isn’t necessarily instilling confidence in the return of a bull market. The relatively hefty figure still doesn’t shout bull market behaviour to the traders watching the scene. Popular trader TheKingfisher noted in a recent X post that amidst this surge, the order book liquidity looks precarious.
He observed that a significant volume of long liquidations is stacked beneath the $91,000 mark, while short positions above the current price ($96,600) are minimal. This disparity indicates a potential for downside movement, raising risks for long positions that are held at these levels. Essentially, the fuel for further upward movement appears to be lacking at the moment.
In the same vein, Glassnode reiterated that several key resistance and support levels need to be established for Bitcoin to continue its upward journey. They referred to the 111-day simple moving average (SMA) and the cost basis of short-term holders (STHs) as fundamental levels to be breached. The current price has just cleared these pricing models and is trying to consolidate, pointing to some strength behind it.
Yet, they cautioned that if Bitcoin cannot hold these levels, a rejection could revert prices back into bearish territory. Such a scenario would plunge many back into notable unrealized losses, potentially causing an even more significant dampening effect on the current market sentiment.
In summary, while Bitcoin may be flirting with the high end of the spectrum, there’s a tightrope to walk regarding long-term holder behaviour and how likely they are to cash in on profits amidst ongoing volatility.
