A recent Glassnode report indicates a notable improvement in the metric for Unrealized Profit and Loss among long-term Bitcoin holders, reaching levels observed before the Terra collapse. This metric’s recovery has sparked speculation about the market entering a “belief” phase by January 2024.
By mid-January 2024, the average unrealized profit for Bitcoin’s long-term holders impressively rose to 55%, signaling a significantly positive trend. Glassnode’s analysis reveals these levels of profits were last seen before the Terra Luna ecosystem’s downturn in early 2022.
Despite these profits, some long-term holders chose to sell their assets at current prices to benefit from the latest Bitcoin rally. However, the Long-Term Holder Supply only slightly decreased by about 75,000 BTC since November 2023, from its all-time high, with this investor group still controlling a significant 76.3% of the circulating Bitcoin supply.
Before the third quarter of 2023, the Long-Term Holder Supply metric remained negative for over a year, indicating that passionate Bitcoin investors held onto their coins at a loss. The recent shift to positive territory highlights a significant turnaround for this investor group, reflecting renewed optimism and confidence in Bitcoin’s potential.
Despite positive developments for long-term investors, Bitcoin unexpectedly fell below the year’s lowest levels. Glassnode’s “rainbow” version of the chart shows a shift from the “Optimism/Anxiety” to the “Belief” zone, in line with moderate optimism among investors. Concurrently, mixed signals were sent to the market with the approval of a Bitcoin ETF in the US, followed by a price drop to nearly $40,000 on major spot exchanges. Glassnode attributes this 18% price decline to unhealthy derivative leverage dynamics and some investors taking spot profits.