Bitcoin below $27k as short-term holders lock in record profits

Bitcoin has fallen below $27,000 as short-term holders have locked in the highest profit since the November 2021 all-time high.

Short-term Bitcoin Holder Realized Profits have increased recently

According to data from the analysis company at the chain Glass node, short-term owners recently realized about $292 million in profits. The relevant indicator here is “realized profit”, which measures the total amount of profit (in USD) that investors across the Bitcoin network are currently locking in.

This calculation works by going through the chain of each coin sold to see the last transaction price. If this previous selling price for a coin was less than the price it is now moving to, it is sold at a profit.

The realized profit indicator then adds this profit amount to its value and then repeats the process for all transactions on the BTC blockchain.

This indicator can also be applied to a specific market segment, such as an investor group. The entire Bitcoin sector can be divided into two main investor groups: short-term holders (STHs) and long-term holders (LTHs).

Here, the relevant group is the former, including all investors who have held their coins since less than 155 days ago. Naturally, holders who carry their coins longer than that fall under the LTHs.

Below is a chart showing the data for Bitcoin STH realized profits over the last couple of years.

The value of the metric seems to have spiked pretty high in recent days | Source: CryptoQuant

The Bitcoin STH realized profit used in the graph is the “unit adjusted”, which means that transactions between wallets owned by the same entity have been excluded from the data (an entity can be both a single investor and a group of owners).

From the graph, it is clear that the indicator had been at quite low values ​​during the bear market, which makes sense as the prices covered during the 155-day duration will either be greater or close to the current price, so there would not be many opportunities for STHs to reap any substantial profits.

However, this trend changed once the rally started in January, when the STHs who bought at the low bear market prices now suddenly made huge profits.

The metric dropped in value when the BTC price plunged below the $20,000 mark earlier this month, but with the fresh sharp uptrend in the past week, the STHs have once again started to realize some significant gains.

The metric’s current value suggests that STHs had recently realized around $292 million in gains, the highest value since November 2021, when Bitcoin recorded its all-time high price.

Such profit-taking by these investors can hurt the price, and it appears that the asset has already experienced the bearish effect of this, as BTC has now plunged below the $27,000 mark.

BTC price

At the time of writing, Bitcoin is trading around $26,800, up 10% in the last week.

BTC has plummeted on the daily chart | Source: BTCUSD on TradingView

Featured image from Kanchanara on Unsplash.com, Charts from TradingView.com, Glassnode.com