BTC Short-Term Holder Profits Have Been Shrinking For 431 Days Now

Data from Glassnode shows the Bitcoin profit in supply held by short-term holders has been going down for 431 days now.

Bitcoin Short-Term Holder Supply In Profit Has Been In Compression Phase Recently

According to the latest weekly report from Glassnode, the STH supply in profit usually goes through three phases each cycle.

The “supply in profit” is an indicator that measures the total amount of Bitcoin currently being held at some profit on the network.

The metric works by looking at each coin on the chain to see what price it was last moved at. If this price for any coin was less than the BTC value right now, then that particular coin is holding some unrealized profits currently.

The “short-term holder” (STH) group is a BTC cohort that includes all investors who have been holding onto their coins since less than 155 days ago.

Now, here is a chart that shows the trend in the share of the Bitcoin supply in profit owned by the STHs:

Looks like the value of the metric has gone down in recent days | Source: Glassnode's The Week Onchain - Week 39, 2022

As you can see in the above graph, the Bitcoin STH supply in profit has been following the same three phases during the different cycles.

The first phase takes place right after the price of the crypto reaches the cycle tops, where the decline causes the STHs to go into significant losses.

Further plunges in the BTC value that follow cause STH profits to shrink even smaller, until the drawdown slows down and these holders’ cost basis catches up with the actual price. This second phase is the compression period.

Finally, as the STH cost basis nears the market price after this phase, any significant boosts in the price also simultaneously cause large amounts of STH supply to get into profit. In this third phase, the STH supply in profit goes through an expansion along with the coin’s value.

From the chart, it’s apparent that the Bitcoin market is currently in the second phase as the indicator’s value has been experiencing compression.

The STH supply in profit has been stuck in this phase for 431 days now, longer than in any of the previous cycles.

BTC Price

At the time of writing, Bitcoin’s price floats around $20.1k, up 5% in the last seven days. Over the past month, the crypto has lost 1% in value.

The value of the coin seems to have sharply gone up over the last twenty-four hours | Source: BTCUSD on TradingView
Featured image from Dmitry Demidko on Unsplash.com, charts from TradingView.com, Glassnode.com