According to on-chain data, short-term holders are selling into the Bitcoin rally to profit while they can.
According to Glassnode, certain Bitcoin investors are selling while they can after the principal cryptocurrency rebounded $23,000 earlier this month.
The current research from the blockchain intelligence company examines recent on-chain behavioural trends displayed by both short and long-term investors.
The newsletter, which was published on Monday, starts by looking at Bitcoin’s price, which has recaptured “several on-chain pricing models.”
One model incorporates the investor price, which represents the average purchase price for all coins spent and distributed by Bitcoin miners. The typical miner has returned to profitability after defeating this model at $17,400.
The rise has also brought many people’s Bitcoin back into profit, with the Percent Supply in Profit rising from 55% at $16,000 to 67% at $23,100. This was one of the sharpest increases in Bitcoin profitability during a bear market in history.
According to Glassnode, changes in this measure can help identify whether a market rebound is underway. However, large fluctuations like this encourage Bitcoin holders who have returned to profit to start realising some of their gains.
The Percentage of Short-Term Holder Supply in Profit, in instance, has risen beyond 97.5%, at which point investors “tend to grasp the opportunity and depart at break-even or profit.”
“Given this significant increase in profitability, the likelihood of sell pressure from short-term holders is expected to increase proportionately,” Glassnode added.
The statistics already confirms this: trading volume among short-term Bitcoin holders (those who last moved their coins less than 6 months ago) has surged much above its long-term falling trend. Miners have also bought into the rise.
“As a result, the present rally’s longevity may be viewed as a balance between inflowing and newly deployed demand, matching the supply sucked out of investor wallets by these higher prices,” Glassnode continued.
While short-term holders sell, the number of coins that haven’t moved in more than 6 months is increasing at a rate of 100,000 BTC every month. That suggests that HODLer conviction is still high, even in the midst of a market rally.
At current pricing, the average long-term holder is nearly at a break-even point, which means their coins are worth the same as when they were purchased.
Glassnode predicted last week that Bitcoin’s spike in volatility this month could indicate the start of a cyclical bull market.