Bitcoin (BTC) trades at $57,450, 22% below its all-time high of $73,835, reached on March 14. Despite the recent bearish price action, analysts say the average Bitcoin investor remains “relatively profitable.”
According to market intelligence firm Glassnode, Bitcoin investor profitability data indicates that this remains a relatively shallow drawdown compared to historical bull cycles, suggesting that the aggregate investor remains in a relatively robust financial position.
Taking the ratio between total unrealized profit and unrealized loss, Glassnode analysts found “that profits remain 6x larger than losses.” This ratio has maintained above the current value for about 20% of trading days, highlighting the robust financial position of the average Bitcoin investor.
“On average, BTC investors are holding relatively small unrealized losses compared to prior cycles, suggesting a relatively favorable position overall.”
Bitcoin unrealized profit to unrealized loss ratio. Source: Glassnode
Meanwhile, the bull market seems to have taken a pause. Short-term holders—those who have held BTC for less than 155 days—bear the brunt of current market pressure as prices stay underwater.
The STH cohort has experienced significant unrealized losses “with the magnitude consistently increasing over the last few months,” the report noted. However, when analyzing these losses relative to the market, Glassnode analysts found that they have not yet reached the full-scale bear market territory.
The chart below shows that the STH market value realized value (MVRV) ratio has dropped below the break-even value of 1.0 and is trading at levels similar to August 2023, during the recovery rally after the FTX collapse.
“This tells us that the average new investor is holding an unrealized loss.”
Bitcoin short-term holder MVRV. Source: Glassnode
The report also highlighted that all age bands within the STH cohort are currently holding unrealized losses.
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Bitcoin price needs to reclaim the STH cost basis
Data from Cointelegraph Markets Pro and TradingView shows Bitcoin price trading at $57,450, 7% below the STH cost basis of $62,400.
Unless the spot price reclaims the STH cost basis, “there is an expectation for further market weakness,” Glassnode analysts warned. They added that the true market mean around the $51,000 demand zone remained a key area of interest that must be maintained for the bull market to continue.
“In the event of a local downturn, the pricing level of $51k remains a critical area of interest that must be maintained for further price appreciation.”
Bitcoin realized price true-market mean. Source: Glassnode
Philip Swift, managing director of Bitcoin Magazine Pro, made similar observations, saying that Bitcoin’s spot price is currently “below the entry cost basis for many short-term investors.”
In a Sept. 3 newsletter, Swift explained that the current scenario mirrored the August and September price action in 2023 when the price spent close to 60 days below the STH realized value.
“Until that changes and Bitcoin’s price moves back above this metric, there will be uncertainty in the market as short-term investors hold paper losses.”
Bitcoin STH realized price. Source: Bitcoin Magazine Pro
Swift added that for the bull run to continue, the price has to climb back above the STH cost basis, “which will help restore some much-needed confidence in the market.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.