8 months ago
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Bitcoin’s advance to $71,375 on March 26, approaching its all-time high, was stalled due to intensified profit-taking activities, according to insights from Glassnode.
“Several on-chain indicators have flagged an uptick in profit-taking events,” the analytics firm wrote in a newsletter received by Crypto.news.
Glassnode’s analysis revealed that as Bitcoin’s price retracted from its all-time high to a recent low of $61,200, approximately 2.0 million Bitcoin shifted from ‘in-profit’ to ‘in-loss.’ However, as the market recovered slightly, around 1.0 million of these coins regained their ‘in-profit’ status due to the substantial volume of transactions at these elevated price levels.
Net Realized Profit/Loss | Source: Glassnode
According to Glassnode, this behavior marks one of the more pronounced ‘supply clusters’ during pullbacks since the lows of 2022.
Glassnode emphasized that a considerable portion of the 2.0 million Bitcoin, with a new cost basis above $61,200, had recently changed hands. This, according to the newsletter, is indicative of previous owners actively capitalizing on profits.
This trend was also exemplified by the Spent Output Profit Ratio (SOPR) metric variations cited in the newsletter, which demonstrated an uptick in profit-taking in the spot markets. Specifically, the Entity-Adjusted SOPR variant has approached levels last seen during the 2021 bull market’s peak, further cementing Glassnode’s profit-taking theory.
BTC SOPR Variants | Source: Glassnode
Analysts observed that during the rally to the $73.2k all-time high, over $2.6 billion in realized profit was secured through on-chain transactions. The analytics firm attributed 40% of this profit-taking to Long-Term Holders.
Glassnode speculates that some of these investors include those divesting from the Grayscale Bitcoin Trust (GBTC). Since its conversion to a spot ETF, the Grayscale GBTC fund has seen approximately 277,393 BTC in outflows as of March 27.
Meanwhile, short-term holders reportedly locked in the remaining $1.56 billion in profits. The report added that traders were leveraging the inflowing liquidity and bullish momentum, mirroring previous market cycles.
“Realized profit by both cohorts has reached a similar magnitude to during the 2021 bull market peak.”
Concluding its analysis, Glassnode wrote that the recent trend is “not atypical market behavior.” Historical data has pointed out that similar patterns have been observed during all previous all-time high cycles, it added.
“Each time the Bitcoin price is at, or close to, an all-time high, there’s a division between those wanting to take money off the table and those betting on further increases. It becomes a tug-of-war between Bulls and Bears,” Clive Thompson, a former director in Swiss banking and Bitcoin proponent, told Crypto.news.
This polarization typically leads to a temporary market pause, a phenomenon Thompson notes as “perfectly normal” in the vicinity of all-time highs.
Thompson also noted the recent shift in ETF inflows, which turned positive on Tuesday, March 26, after a week of outflows. This contributed to a modest positive effect on the Bitcoin price, all still below its all time high of $74,000.
“Should the inflows to the ETFs remain positive, we’re likely to see the Bitcoin price surpass previous records and climb higher,” he added.
Glassnode’s observations are shared amidst a recovery phase in the cryptocurrency market. Recent reports indicate that Spot Bitcoin ETFs have seen inflows amounting to $418 million, marking the largest influx since March 13.
