According to a new report published by crypto analysis firm Glassnode, Bitcoin‘s (BTC) momentum above the $44,000 level faced a significant hurdle last week. This situation could indicate a potential change in investor sentiment, especially among short-term holders (STHs).
Glassnode evaluated the STH supply profit/loss ratio. This measure indicates how much profit or loss STHs have made and helps to determine investors’ tendencies to overbuy or oversell. Historically, when the profit/loss ratio is above 20, market conditions are considered overheated, below 0.05 is considered oversold, and around 1.0 indicates a balance point. The market recovery that began in October led the STH Supply Profit/Loss Ratio to rise above 20.
The overheating experienced with prices above $44,000 led investors who had held the cryptocurrency for less than six months to realize their gains. On this matter, Glassnode pointed out that STHs took advantage of demand liquidity by cashing in their profits.
During significant market pullbacks, increased excitement and reactive selling behaviors among investors are observed. In its report, Glassnode, based on combined insights from the STH Supply Profit/Loss Ratio, NVT-Premium indicators, and Realized Profit/Loss Ratio, noted that the recent rally was accompanied by significant profit realization and that we might see a combination of factors indicating the emergence of demand saturation.
On the other hand, at the time when the article was written, trading activity on the 12-hour chart showed that the basic momentum indicators had shifted below the relevant central lines. This could suggest a decrease in BTC accumulation and an increase in momentum for crypto sales.