Bitcoin (BTC) Profit-Taking Slowing According to Glassnode

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In Brief
  • Data from analytics firm Glassnode appears to show investors might stop taking profits in the near-future.

  • The indications come as the Bitcoin supply shortage is exacerbated further.

  • With demand for the top-cryptocurrency as high as it is, the fundamental principles of economics suggest the "moon" might not be far off.

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Indicators show Bitcoin profit-taking may be slowing down, despite the top-cryptocurrency dipping below $44,000.

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The Sell-Off Slows

According to an analysis conducted by cryptocurrency data analytics firm Glassnode, there are indications that Bitcoin (BTC) investors are slowing profit-taking even with BTC’s dip to $44,000.

Glassnode examined the Spent Output Profit Ratio (SOPR) – a measure of a cryptocurrency market’s overall profit or loss. An SOPR value above one suggests investors are selling a crypto-asset at in profit, and vice versa.

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Specifically, it takes the final value of aggregate sales for a specific cryptocurrency and divides it by the aggregate purchase value, giving a profit or loss ratio.

For BTC, the SOPR just went negative for the first time since September last year. This indicates BTC sellers are selling at a loss. Accordingly, one would therefore expect fewer Bitcoin investors to continue selling, so as to wait for a profitable period.

Bitcoin Supply vs Demand

Indeed, the analysis corroborates yesterday’s revelation that BTC miners have begun accumulating rather than selling their mining rewards.

This is potentially due to the fact that total net realized losses for BTC hit a record $243 million on Feb. 27, the aggregate dollar value of the negative SOPR.

Both indicators also suggest the growing Bitcoin supply shortage is set to be further exacerbated, amidst unprecedented levels of demand for the top-cryptocurrency.

In February alone, cryptocurrency fund manager Grayscale Investments bought over $700 million worth of BTC and Ethereum (ETH), as demand from institutional clients continued to balloon.

The fund manager is also pushing ahead with plans to expand its already sizable cryptocurrency fund offering, introducing several other cryptos to its list.

With 20% of all BTC already lost forever, more demand will just send the price higher.

Short-Term Woes Persist

Despite the flurry of “bullish” indications in recent days, the cryptocurrency market continues to suffer through a significant sell-off.

At press time, the top-cryptocurrency is hovering just above the $43,000 mark. The total market capitalization in the space has shed over $500 billion in less than a week.

Today, most of the cryptocurrency market, save BTC, is down at least 10%. In that regard, the monthly suggestion that the 30-day BTC futures settlement date is to blame is here again.

Evidence points to an increase in volatility pre-settlement. However, there is no authoritative study yet that finds a significant relationship between the two variables (BTC price and BTC futures settlement date).

Experience puts today’s sell-off down to profit-taking following a rocket-fueled rally. Whatever the cause, demand is still strong, supply short and the data show a slowing of bearish momentum.

Moon? Maybe soon.

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Emmanuel entered the cryptocurrency space in 2013 as a cryptocurrency broker. He is a crypto-enthusiast, entrepreneur, and investor, who has built and led several projects and communities in the space. He is CEO and co-founder of Provence Intelligence, a boutique crypto-consultancy firm that aims to bridge the gap between the cryptocurrency and DLT space and the traditional world. Interests include DeFi, non-blockchain DLTs, and the synthetic derivatives space.

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