Bitcoin all-time high soon to be over? Long-term holders of BTC are holding back bears
3 min readWhen we take a detailed look at the unrealized profits and losses of long-term Bitcoin holders, we see important insights for further price developments in the current crypto bull market. The well-known fundamental analyst On-Chain College provides important insights into the market phases and appropriately classifies the current events surrounding Bitcoin.
Significance of Bitcoin outflow from exchanges & its impact on Bitcoin price cycles
During the analysis, it is noticeable that the periods in which long-term Bitcoin holders have high unrealized profits often correlate with overheated market phases. The rounded highlights in the blue line of the graphic of On Chain College’s tweet show that these phases can last for months.
Historically, this fundamental development in BTC would indicate a continuation of the bull market moving forward. Based on that analysis, investors are likely to conclude from this perspective that, despite the rather short-term price fluctuations, the long-term holding period plays a far more important role in the stability of the market and price trends.
I like looking at how much unrealized profit long-term Bitcoin holders are sitting on during bull cycles.
The reason is that the overheated period (blue line) is rounded at the top and can last for months.
If history repeats, we still have months more of higher prices to go pic.twitter.com/i5fFb3e35o
— On-Chain College (@OnChainCollege) March 1, 2024
The significant outflow of Bitcoin from exchanges represents an indicator of a shift in sentiment among the majority of investors. Such a decline in supply on trading platforms in most cases indicates that investors believe in a long-term increase in value. As a result, they are therefore unwilling to sell their holdings. You move your coins accordingly to your own wallets. From these, the direct sale of cryptocurrency holdings is not possible.
This can be interpreted as a sign of a desire for greater control and security while assuming that its coins will retain value over the long term. This behavior can potentially lead to a shortage of supply on crypto exchanges. The reduced liquidity can potentially cause a price-increasing movement if demand remains the same or even increases.
Realized market capitalization of Bitcoin reaches record high: How high can this BTC metric rise?
In the recent development of the crypto market, Bitcoin’s realized capital has reached an all-time high. In this context, this key metric in the on-chain area of fundamental analysis of cryptocurrencies reflects the cumulative sum of the last transaction prices multiplied by the number of Bitcoins traded.
The most important Bitcoin on-chain metric, realized cap, just reached an all-time high.
This indicates a record amount of value stored in the network as well as the network's cost basis nearing record highs — a higher cost basis means less incentive for profit-taking. pic.twitter.com/mjvftPuUgn
— Will (@WClementeIII) March 1, 2024
The stored value in the Bitcoin network is therefore displayed appropriately. The network cost base approaching record levels suggests that investors currently have less incentive to take profits. The reason for this should be the current cost base for Bitcoin, which approaches the marginal trading price.
Less incentive to take profits when the Bitcoin MVRV ratio is low
As one of the co-founders of Reflexivity Research, Will Clemente emphasizes in current market events that with the current constellation of the MVRV ratio, the incentive to take profits is lower. The MVRV ratio stands for the relationship between market value and realized value. In this case for Bitcoin. This finding is particularly relevant because a low MVRV ratio potentially indicates that Bitcoin is undervalued relative to its cost basis. However, at the top of the market, a higher ratio would create a stronger incentive to sell BTC.
