Glassnode: Short-term Bitcoin owner profits have been shrinking for 431 days now
Data from Glassnode shows that Bitcoin profits in the supply held by short-term holders have declined for 431 days now.
Bitcoin short-term holder supply in excess has been in a compression phase recently
According to the latest weekly report from Glassnode, the surplus STH supply usually goes through three phases each cycle.
“Supply in profit” is an indicator that measures the total amount of Bitcoin currently held at a certain profit on the network.
The metric works by looking at each coin in the chain to see what price it was last moved to. If this price for a coin was less than the BTC value right now, that particular coin has an unrealized profit at the moment.
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The “short-term holder” (STH) group is a BTC cohort that includes all investors who have held their coins since less than 155 days ago.
Now, here is a chart showing the trend in the share of Bitcoin supply in profit owned by the STHs:
Looks like the value of the metric has gone down in recent days | Source: Glassnode's The Week Onchain - Week 39, 2022
As you can see in the graph above, the Bitcoin STH supply in profit has followed the same three phases during the different cycles.
The first phase takes place right after the price of the crypto reaches the cycle peaks, where the decline causes the STHs to incur significant losses.
Further plunges in the BTC value that follow cause STH profits to shrink even less, until the drawdown subsides and these holders’ cost basis catches up with the actual price. This second phase is the compression period.
Finally, as the STH cost base approaches the market price after this phase, any significant increases in price will simultaneously result in large amounts of STH supply turning into a profit. In this third phase, the STH supply goes into profit through an expansion along with the coin’s value.
From the chart, it is clear that the Bitcoin market is currently in its second phase as the indicator’s value has experienced compression.
STH supply in profit has been stuck in this phase for 431 days now, longer than in any of the previous cycles.
BTC price
At the time of writing, Bitcoin’s price is hovering around $20.1k, up 5% in the last seven days. Over the past month, the crypto has lost 1% in value.
The value of the coin seems to have sharply gone up over the last twenty-four hours | Source: BTCUSD on TradingView
Featured image from Dmitry Demidko on Unsplash.com, charts from TradingView.com, Glassnode.com
