Key Points
- Bitcoin’s Long Term Holder Net Unrealized Profit/Loss (LTH-NUPL) shows a significant decline in profitability.
- The long-term Market Value to Realized Value (MVRV) ratio has been persistently negative, indicating financial pressure on long-term holders.
Despite the relative stability of Bitcoin’s price in recent times, underlying challenges may affect the market. Notably, the Long Term Holder Net Unrealized Profit/Loss (LTH-NUPL) is showing a significant profitability decline for long-term holders.
Declining Bitcoin Profitability
The LTH-NUPL analysis on Glassnode reveals a substantial decrease in profitability for long-term Bitcoin holders. This trend could be a critical market direction indicator. In March 2024, Bitcoin’s price and the LTH-NUPL peaked, suggesting that many long-term holders had substantial unrealized profits.
However, post this peak, both the price and LTH-NUPL started to decline, indicating possible profit-taking in the market. From June to August 2024, the LTH-NUPL continued to decline, reflecting BTC’s downward price trend. As of August 2024, the LTH-NUPL is at the lower end of the spectrum, indicating significantly diminished profits for many long-term holders.
Implications for Bitcoin
This situation implies that the market could be nearing a critical point. It might be approaching a capitulation point, where holders might start selling their holdings to avoid further losses. Alternatively, it could be nearing a potential bottom, where new accumulation could occur as investors look for buying opportunities.
A high NUPL value indicates that the majority of the coins held by this group are in profit, potentially leading to profit-taking and a market correction. Conversely, a low or negative NUPL value implies that more coins are held at a loss, which could lead to capitulation or present a buying opportunity for investors.
AMBCrypto’s analysis of Bitcoin’s 90-day MVRV reveals that long-term holders were holding at a loss at the time of writing. The 90-day MVRV has been below zero since 1st August, and as of this writing, it stood at approximately -6.6%. This suggests that investors who bought Bitcoin during this period were holding an average loss of over 6%.
The persistent negative MVRV suggests that long-term holders were experiencing financial pressure, which could influence their decision-making in the near term. This trend is crucial because how these holders react—whether by selling off their holdings to minimize losses or by holding on in anticipation of a market recovery—will significantly impact Bitcoin’s price direction.
