Despite choppy price action, the unrealized profit of Bitcoin (BTC) investors remains constructive. However, volumes across all market facets are declining markedly as an equilibrium between demand and sell-side forces is established, according to Glassnode Insights.
Market Profitability Remains Robust
Sideways price movement tends to manifest as investor boredom and apathy, which appears to be the dominant response across all Bitcoin markets. BTC prices are consolidating within a well-established trade range. Investors remain in a generally favorable position, with over 87% of the circulating supply held in profit, with a cost basis below the spot price.
Employing the MVRV metric, the average coin holds an unrealized profit of around +120%, typical of previous markets trading around the previous cycle ATH. The MVRV Ratio remains above its yearly baseline, suggesting that the macro uptrend remains intact.
Currently, the BTC price is stabilizing and consolidating between the 0.5 and 1 standard deviation range. This again highlights the statistically high profit the average investor is holding despite the recent choppy market conditions.
Lackluster Volume
Despite healthy investor profitability, the magnitude of volume being processed and transferred on the Bitcoin Network following the ATH has declined drastically. This underscores a reduced appetite for speculation and heightened indecision in the market.
A similar story can be observed when assessing the Spot Volume traded across major centralized exchanges. This demonstrates the strong correlation between on-chain network settlement volumes and trade volumes, echoing a sentiment of boredom amongst investors.
Exchange Activity Tumbles
Moving one level deeper, on-chain inflows to exchanges in a BTC denomination show a considerable reduction in activity. Short-Term Holders are currently sending around +17.4k BTC/day to exchanges, markedly lower than the peak of +55k BTC/day recorded as the market hit the $73k ATH in March. Conversely, Long-Term Holder distribution into exchanges is relatively low, with only a marginal 1k+ BTC/day in inflows currently.
More coins are currently being transferred in a position of profit (+11k BTC) than in loss (+8.2k BTC), suggesting that a profit-driven bias remains overall, albeit by a relatively small margin. The average coin sent to exchanges is realizing a profit of around +$5.5k and a -$735 haircut for coins sent in the loss. This infers that HODLers are still divesting, and demand is sufficient to absorb sell-side pressure but not large enough to push market prices higher.
Cash and Carry Basis Trades
Another tool that enables characterization of spot markets is the Spot Cumulative Volume Delta (CVD). This metric describes the net bias in market taker buy vs. sell volume, measured in USD. At the moment, a net sell-side bias dominates the spot market, however, the market continues to trend sideways, indicating that the demand-side is approximately equivalent to the sell-side pressure, keeping the market range bound.
In the futures market, there is a sustained elevation in open interest, currently over $30B, just shy of its previous ATH. However, a substantial portion of this open interest is related to the market-neutral cash-and-carry basis trade. The considerable growth of open interest at the CME Group exchange highlights a growing presence of institutional investors. The CME Group exchange currently hosts over $10B in OI, representing just under a third of the global market share.
Despite the rising open interest, futures trade volumes have experienced a similar decline to spot markets and on-chain transfer volumes. This suggests a relatively light appetite for speculation, and a higher dominance from set-and-forget basis trade and arbitrage positions.
Summary and Conclusions
Despite the choppy and sideways market conditions, the average Bitcoin investor has remained largely profitable. However, investor decisiveness has declined as signified by contracting volumes across spot, derivatives markets, and on-chain settlement.
An equilibrium in both the demand and sell-side appears to be established, resulting in relatively stable prices and a notable lack of volatility. This stagnation in market movement translates into a degree of boredom, apathy, and indecision by investors. Historically, this suggests that a decisive price movement in either direction is necessary to stimulate the next round of market activity.
Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.
Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies.
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