The Second Week of February by Glassnode

The Bitcoin market has been going through some fluctuation recently, leading to a period of stability above the cost basis of several groups. Despite a recent dip to $22.6k, the average Bitcoin holder is now in a position of unrealized profit, as indicated by several large-scale on-chain indicators.

This article published by Glassnode takes a closer look at the spending patterns following the price increase, by analysing a representative sample of the market to understand emerging trends and assess the overall market sentiment.

First, they examined the realised profits and losses that the market has experienced during this cycle. There was a surge of profit-taking in October 2020, but this has diminished over the last two years and is now back to 2020 levels. However, there has been a recent resurgence in realised profits due to the recent price increase, although it is still less intense compared to the exuberance of the 2021-22 cycle.



Losses realised by the market reached a peak in May 2021, but have since declined to the baseline level of around $200 million per day, excluding major events such as the LUNA/FTX sell-off. By comparing realised profits to losses, we can determine the changes in market dominance between the two.

The Bitcoin Sell-Side Risk Ratio measures the magnitude of realised profit and loss as a percentage of the Realised Cap, which is a valuation of the network. Despite the recent price increase, the combined volume of realised profit and loss remains small relative to the overall asset size, indicating that spending events are still limited in scale.

The Net Unrealized Profit/Loss Ratio (NUPL) shows that the recent price surge has pushed the spot price of Bitcoin above the average acquisition price, putting the market back into a state of unrealized profit. This ratio can provide a useful indicator for the overall market recovery.



The recent price increase has improved the market’s financial position, as it has risen above several aggregate on-chain cost-basis models. This momentum metric is approaching a critical equilibrium point, which is similar to the recoveries seen in 2015 and 2018. A confirmed breakthrough past this point typically signals a shift in the overall market structure.

The Spent Output Profit Ratio (SOPR) metric can be used to assess the aggregate profit multiple earned by various market groups. In the case of the Long-Term Holder cohort, there have been persistent losses since the LUNA collapse, but there are signs of recovery, with a potential uptrend in LTH-SOPR emerging.



The Adjusted Reserve Risk metric quantifies the behaviour of the HODLer class, by measuring the balance between the aggregate incentive to sell and actual coin expenditure from long-dormant holdings. Higher values suggest an increase in price and HODLer spending, while lower values indicate a decline in price and HODLer spending. A change in trend appears to be underway, as this oscillator approaches its equilibrium position, which suggests that the opportunity cost of HODLing is decreasing while the incentive to sell is increasing.

In conclusion, recent price changes and on-chain indicators suggest that the market is transitioning from a state of HODLing to one of increasing profit realisation and a rotation of capital from early bear market accumulators to new investors and speculators.

For those of you that are not familiar with the meaning of the term “HODL”, it is a slang term in the world of cryptocurrency that originated from a typo in a Bitcoin forum post back in 2013. The term HODL stands for “Hold On for Dear Life” and it refers to the practice of holding onto your cryptocurrency investments, regardless of price fluctuations, rather than selling them.






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