As Bitcoin enters 2024, there is a sense of optimism as the confidence of long-term holders, Bitcoin’s most faithful disciples, is revived. After weathering the storm of the Terra collapse, these “diamond hands” are holding unrealized profits of 55%, a level last seen before the collapse in May. It was a completely groundbreaking shift that portrayed believers ready to ride the wave once again.
Bitcoin Long-Term Profitability
This newfound confidence is captured by the LTH-NUPL indicator, which measures long-term holding profitability. A return to pre-crash highs suggests that Bitcoin’s core foundations are no longer underwater, and underwater beliefs have been replaced by floating expectations. The ‘Rainbow Chart’, a visual representation of market sentiment based on LTH-NUPL, has moved from the dark sea of ’optimism/anxiety’ to the sunny shores of ‘faith’.
The extent of unrealized profit and loss held #Bitcoin Long-term holders can be measured by LTH-NUPL.
This indicator reached 0.55 this week, which is meaningfully positive and represents an unrealized gain of 55% for the average long-term investor. pic.twitter.com/bua4HBLazn
— glassnode (@glassnode) January 17, 2024
However, a cautionary note sounds. Not all “hodlers” are created equal. While the majority are holding steady, some are cashing in. There has been a slight decline in the supply of long-term holders, a sign that profit-taking may be getting in the way of the party. Add to this the ever-present specter of leverage in derivatives markets, and the potential for a sudden decline increases.
The recent approval of US ETFs further complicates the situation. Although initially met with cheers, the price of Bitcoin began to rally and fell to $41,000 before reaching near $43,000. Was this a correction or a foreshadowing of things to come? Only time will tell.
One thing is clear: Bitcoin has reignited faith among its core believers. But whether this will lead to continued growth or another roller coaster ride is yet to be seen. The bulls have returned, fueled by profits and optimism, but the bears have not gone into hibernation. This dance between faith and caution will define Bitcoin’s path in the coming months.
Bitcoin slightly below the $43K level today. Chart: TradingView.com
Bitcoin Stuck Below $43,000: Waiting for Institutional Whales to Pounce
Meanwhile, after sparking excitement with the launch of a US ETF, the price of Bitcoin spent the week stuck below $43,000. Traders seem to be busy rebalancing their portfolios in the wake of this historic event. But the real party guests, the much-anticipated institutional investors, have yet to arrive.
BTC price action. Source: Coingecko
But analysts remain optimistic and are looking to the horizon for signs of the whale. They whisper about delayed allocations, the torture of waiting for the dust to settle before jumping into a Bitcoin pool. But whispers don’t move markets.
Technically, the scene was tense. The bulls broke through at $42,700 and fended off a bearish attack that dared to fall below. Now, cautious optimism is building and the price is heading back towards $43,000. Will this be the spark that ignites an institutional seizure?
Featured image from iStock