The Week Onchain》Week 48: Bull Market Seen from Data, BCD Made 2 Billion Pounds!

Editor's Note

This report is translated from glassnode's 'Touching Distance'. The BTC price is approaching the historic milestone of 100,000, and the market dynamics have entered a frenzy stage. This article explores the distribution behavior of long-term holders in depth, revealing how they lock in profits during the price increase process. Since the peak of supply in September, long-term holders have distributed 507,000 BTC, with a daily average realized profit of a record-breaking 2.02 billion US dollars, demonstrating the market's strong reliance on liquidity and demand.

Interestingly, the main selling pressure comes from investors who have held coins for 6 months to 1 year, while more senior coin holders with longer holding periods appear to be more cautious or waiting for higher prices. This spending behavior reflects the complexity of the current market--how will the struggle between oversupply and influx of demand affect future trends? This article uses rich on-chain data and in-depth structural analysis to reveal the key drivers behind the market and provide a comprehensive and profound investment perspective.

Key Summary

As the price of Bitcoin approaches 100,000, long-term holders are beginning to diversify over 507,000 BTC. Although this is still less than the 934,000 BTC sellers during the rally in March, it is still significant.

Long-term holder is locking in a large amount of profit, setting a new daily realized profit record of 20.2 billion.

When evaluating the composition of expenditure entities, most of the selling pressure seems to come from the age of the currency between 6 months and 1 year.

💡 To view all the charts in this report, please visit 'The Week On-chain' dashboard.

Strong long-term holder distribution

After setting multiple new historical highs, the price of BTC is now approaching the impressive and long-awaited value of 100,000 per Token. Like all previous cycles, long-term holders are taking advantage of the influx of Liquidity and strengthened demand to begin large-scale allocation of their held supply.

Since the peak of long-term holder supply in September, the group has now distributed a significant 507,000 BTC. This is a considerable amount; however, it is smaller in scale compared to the 934,000 BTC spent during the ATH rally in March 2024.

Image source: glassnode real-time chart-BTC: long/short term holder threshold

By evaluating the percentage of total supply allocated to long-term holders who trade from profitable positions, we can see a similar situation. Currently, the average daily allocation of long-term holder supply is 0.27%, with only 177 days of trading records showing a higher allocation rate.

Interestingly, we can observe that the relative distribution rate is greater than the ATH in March 2024, highlighting more aggressive distribution activities.

Source: glassnode real-time chart - BTC: Percentage of long-term holder spending to total supply

We can also check the long-term holder activity indicator to evaluate the balance between Coinday creation (holding time) and Coinday destruction (time held). Typically, a characteristic of rising activity is high spending activity, while a declining trend indicates HODL (long-term holding) as the main dynamic.

Despite the current supply distribution rate being higher than the peak in March, the amount of Coinday destruction is still relatively low. This highlights that most of the long-term holder coins being traded may have been acquired relatively recently (e.g., on average, they are more likely to be 6 months old rather than 5 years old).

Source: glassnode real-time chart-BTC: Long-term activity

Lock in Profit

Long-term holders play a crucial role in the price discovery process as they are the main source of previously dormant supply reentering circulation. As the Bull Market progresses, evaluating the level of arbitrage among this group becomes more cautious, as they tend to become more active as prices rise.

Long-term holders currently realize a huge profit of 20.2 billion every day, setting a new historical high and surpassing the previous record set in March. It may take some time to fully absorb this supply surplus with strong demand on the demand side, possibly requiring a period of re-accumulation to fully digest.

Image source: glassnode Realized Profit of long-term holders adjusting physically [USD] (7-day moving average)

Assessing the balance between the long-term profits and losses realized by the holder, we can see a rapid acceleration in the ratio of these two in November. By definition, this is due to the lack of long-term holder's loss supply under this price discovery mechanism.

From a historical perspective, assuming there is a large and sustained inflow of new demand, the price has been in a frenzy state for several months.

Source: glassnode real-time chart - BTC: Long-term holder profit/loss ratio

Seller's Risk Ratio

The seller risk ratio assesses the total realized profits and losses that investors have locked in relative to the asset size (evaluated through market capitalization). We can consider this indicator based on the following framework:

High value indicates that investors have spent significant profits or losses in relative to their cost Benchmark currency. This situation indicates that the market may need to find a new balance, and usually occurs after high volatility price changes.

Low value indicates that most coins are spent close to their breakeven point, indicating a certain degree of balance has been reached. This situation usually means that the 'profit and loss' in the current price range has been exhausted, and typically describes a low volatility environment.

The seller's risk ratio is approaching a high value area, indicating a large amount of Arbitrage is currently occurring within the current range. However, the current reading is still far below the terminal value reached in the previous cycle. This indicates that the previous Bull Market has seen enough demand to absorb supply, even under similar relative distribution pressure.

Image source: glassnode real-time chart-BTC: long-term holder seller risk ratio

Expenditure composition

After establishing a significant rise in long-term holder Arbitrage, we can increase the accuracy of this assessment by carefully examining the composition of the sold supply.

We can use age segmentation to measure which subgroups contribute most to seller pressure by implementing a profit indicator. Here, we calculate the cumulative arbitrage volume by age since early November 2024.

Profit in 6 months to 1 year: 12.6 billion

Profit realization in 1 to 2 years: 7.2 billion

Profit achieved in 2 to 3 years: 48 billion

Profit achieved in 3 to 5 years: 6.3 billion

Profit achieved for over 5 years: 48 billion

Currency with an age between 6 months and 1 year dominates the current selling pressure, accounting for 35.3% of the total volume.

The dominance of currencies ranging from 6 months to 1 year highlights that most of the expenses come from relatively recently acquired currencies, indicating that more experienced investors remain cautious and may patiently wait for higher prices. It can be argued that these selling volumes may describe investors with a swing trading style, who accumulated after the launch of ETFs and plan to ride the next wave of market fluctuations.

Source: glassnode real-time chart-BTC: cumulative realized profits divided by age [November 2024]

Next, we can apply the same method to calculate the profit scale divided by the realized percentage investment return rate for all investors.

0%-20% Achieve Profit: 101 Billion

20%-40% achieve profit: 107 billion

40%-60% Profit Realization: 7.3 billion

60%-100% Achieve Profit: 72 Billion

100%-300% realized profits: 13.1 billion

Profit of over 300%: 10.7 billion

Interestingly, these groups have a certain degree of consistency, and the profit ratios achieved by all groups are similar. It can be said that this represents a strategy of 'taking chips off the table', where low-cost benchmark investors achieve similar dollar profits by selling fewer coins over time.

Source: glassnode Real-time Chart-BTC: Cumulative Realized Profit Divided by Profit Ratio [November 2024]

Especially follow the currencies purchased in 2021, 2022, and 2023, we can observe significant and sustained expenditure during the peak in March.

However, in the current rally, expenses are mainly composed of currencies purchased in 2023, and the currencies in 2021 and 2022 only began to increase selling pressure recently. This is again consistent with the possible explanation of Arbitrage as the dominant strategy of 'swing trading' style.

Image source: glassnode real-time chart - BTC: capital outflow divided by date interval

Assess sustainability

To assess the sustainability of this rise trend, we can compare the current Unrealized Realized Profit Distribution (URPD) with the structure at the ATH in March 2024.

In March 2024, several supply clusters with a supply range of 40,000 to 73,000 ATH changed hands after months of appreciation following the launch of the ETF. In the subsequent seven months of price fluctuations, this region became one of the most significant supply clusters in history.

As the supply is re-accumulated, it forms the ultimate support for the start of this rally.

Source: glassnode Real-time Chart-BTC: Distribution of unrealized realized profits adjusted for entities [BTC]-March 13, 2024

Fast forward to today, the market has risen rapidly, so few coins change hands between 76,000 and 88,000. From this, two key observations can be made:

Price discovery is a process that requires pulling, pullback, and consolidation to confirm the new price range.

There is an 'air gap' below 88,000, and if the market sees a pullback before attempting to break through 100,000 again, this could be an interesting area.

When the market attempts to rediscover balance in this price discovery mechanism, changes in supply allocation can provide insights into areas of interest for supply and demand.

Source: glassnode Real-time Chart-BTC: Distribution of Unrealized Realized Profits for Physical Adjustments [BTC]

Summary and Conclusion

With the strong price trend support, long-term holders are meaningfully distributing the currency, locking in a huge 20.2 billion profit. This has created an excess supply that must be absorbed to accommodate ongoing price increases.

When evaluating the composition of spending entities, most of the seller pressure seems to come from currencies aged between 6 months and 1 year. This highlights that more established entities may require higher prices to unlock the potential of their currencies.

glassnode related links Telegram

Glassnode Studio

Glassnode Alerts Twitter

[Disclaimer]The market is risky, and investment needs to be cautious. This article does not constitute investment advice. Users should consider whether any opinions, views or conclusions in this article are in line with their specific situations. Invest at your own risk.

'The Week Onchain》 Week 48: Bull Market from the Data, BCD made 2 billion pounds! ' This article was first published in 'encryption City'.