Bitcoin (BTC) is trading at $57,450, down 22% from its all-time high of $73,835 recorded on March 14. Despite the recent bearish price action, analysts say the average Bitcoin investor is still “relatively profitable.”
According to market intelligence firm Glassnode, Bitcoin investor profitability data shows that this decline is relatively shallow compared to historical bull cycles, suggesting that overall investors are in a relatively stable financial position.
Taking the ratio between total unrealized gains and unrealized losses, Glassnode analysts found that “gains are six times larger than losses.” This ratio remains above current values for about 20% of trading days, highlighting the strong financial position of the average Bitcoin investor.
“On average, BTC investors have relatively less unrealized losses than in previous cycles, suggesting a relatively favorable overall position.”
Bitcoin Unrealized Profit vs Unrealized Loss Ratio. Source: Glassnode
Meanwhile, the bull market appears to have paused for a moment. Short-term holders (those who have held BTC for less than 155 days) are taking the hit from the current market pressure as prices remain underwater.
The report noted that the STH cohort experienced significant unrealized losses, “which have been steadily increasing in size over the past few months.” However, when Glassnode analysts analyzed these losses against the market, they found that it had not yet reached full-blown bear market territory.
The chart below shows that the STH Market Value to Realized Value (MVRV) ratio has fallen below the break-even value of 1.0 and is trading at similar levels to August 2023, during the recovery rally following the FTX crash.
“This means that the average new investor is facing unrealized losses.”
Bitcoin Short-Term Holders MVRV. Source: Glassnode
The report also highlighted that unrealised losses are currently occurring across all age groups within the STH population.
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Bitcoin price must recover STH cost baseline.
According to data from Cointelegraph Markets Pro and TradingView, the Bitcoin price is trading at $57,450, which is 7% lower than the STH cost of $62,400.
Unless spot prices recover their STH cost base, “we expect the market to weaken further,” Glassnode analysts warned. They added that the true market average around the $51,000 demand zone remains the main area of concern that must be maintained for the bull market to continue.
“In the event of a localized slowdown, the $51,000 level remains a key area of interest that should be sustained for further price appreciation.”
Bitcoin Realized Price Real Market Average. Source: Glassnode
Philip Swift, managing director of Bitcoin Magazine Pro, made a similar observation, saying that Bitcoin’s spot price is currently “below the cost-of-entry threshold for many short-term investors.”
Swift explained in his September 3 newsletter that the current situation is similar to the price action in August and September 2023, when the price was approximately 60 days below the STH realized value.
“Until that changes and the Bitcoin price moves back above this indicator, there will be uncertainty in the market as short-term investors hold paper losses.”
Bitcoin STH Realized Price. Source: Bitcoin Magazine Pro
Swift added that for the bull market to continue, prices would need to rise back above the STH cost basis, which “would help restore much-needed confidence in the market.”
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.