Crypto Markets Analysis: Bitcoin’s Surge Moves Both Short- and Long-Term Holders Into Profitability

The price of bitcoin (BTC) has surged in recent weeks, helping both short- and long-term investors to profit, on-chain data shows.

According to analytics firm Glassnode, as of time of writing the percentage of short-term profiting BTC holders increased to 97.5%, its highest level since November. Bitcoin has also been profitable for long-term BTC holders, according to Glassnode.

"Long-term" is considered over 155 days while "short-term" is less than 155 days.

The Long Term Holder MVRV (market value to realized valued) ratio has risen above 1.0 for the first time in six months, indicating that the cost basis for long-term holders is now below the spot price of bitcoin.

Clearly, investors getting long (buying and owning an asset expected to appreciate over time) on BTC at a lower cost basis following a prolonged decline in BTC's price is driving this trend. But with over 97.5% of short-term supply now in profit, will newer BTC investors cash in on the move higher or maintain their positions, ultimately becoming long-term holders themselves? And what is the significance of either move?

Evidence from January 2018, April 2021 and November 2021 indicates that an increase in short-term supply in profit above 97.5% preceded sharp downturns in price. Are markets now headed in that direction?

Investors may also wish to scrutinize the stablecoin supply ratio (SSR) and the amount of bitcoin being sent to exchanges, among other indicators.

The SSR declines as investors send more stablecoins to exchanges relative to BTC. This trend indicates more capital being sent to exchanges for the purposes of acquiring more bitcoin. A similar metric to remember is the exchange reserve balance of stablecoins, because an increase indicates increased buying pressure.

The SSR has increased slightly since Jan. 9, while the exchange balance for stablecoins has declined, which may be concerning to investors.

The opposite holds true for the bitcoin exchange reserve balance. Bullish investors would not want to see bitcoin exchange balances rise because such an increase would suggest more investors are sending BTC to exchanges for the purpose of selling.