Bitcoin Short-term Profitability Drops, Potential Price Increase Looms

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The Bottom Line

The profits of Bitcoin short-term holders have dropped by 32%, but there is also good news. An analysis of the current market situation suggests a positive price development soon. This trend reversal could attract new investors and lead to a price breakout.

Insight into the Profit Situation

The profitability of Bitcoin short-term holders (Short-Term Holder, STH) has experienced a significant drop, according to crypto analyst Axel Adler. While the profit was still at 42% on March 13, it has now fallen to 10%. Interestingly, the Bitcoin price has not changed significantly during this period. This suggests that the market consolidation of the last two months has sifted out impatient market participants and reset profit levels. Such a cleanup can be seen as positive for the Bitcoin bulls, as it provides new energy for a possible price increase.

Behaviour of Short and Long Term Holders

AMBCrypto took a closer look at the on-chain metrics to analyse the behaviour of short and long term holders. Particularly, the UTXO-Realized-Price-Age-Distribution metric shows that owners of 1 to 18 month old Bitcoins have shown increased activity since March. In contrast, the activity of 18 month to 3 year old Bitcoins decreased, indicating a strong bullish expectation among long-term investors.

New Investors Could Soon Enter the Market

Historically, the first two months after a halving often follow a consolidation phase of Bitcoin. The restrained activity among the older coin owners reflects this expectation. Another report by Axel Adler highlights that the realized market capitalization of investors holding BTC for less than a month has recently dropped sharply, but is now rising again. If this upward trend continues, it could mark the beginning of a new expansion phase for the Bitcoin price.

Our Assessment

Although the profits of short-term holders have decreased, the current market situation indicates an upcoming positive development. The consolidation has cleared the market of impatient participants and set the course for a possible price increase. Long-term investors show a strong bullish stance, and there are increasing signs that new investors could soon enter the market. Therefore, it is advisable for investors and traders to keep an eye on the mentioned metrics and prepare for possible changes.

Sources: Axel Adler on X, CryptoQuant

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