Last week, BTC broke through the 64,000 mark, coming close to the previous bull market high of 69,000. At the same time, the prices of newly issued assets in the market have been continuously pushed up, and a bubble is forming and expanding. For players who have been accumulating BTC for the past two years, they are starting to think about a question: what stage is BTC in now? When should they take profits and exit?
Glassnode provides a wealth of BTC analysis indicators. Among them, the Net Unrealized Profit/Loss (NUPL) and the Long/Short-Term Holder Threshold are selected to assess the market’s current position.
The Net Unrealized Profit/Loss (NUPL) attempts to answer the question of how much of the circulating supply of Bitcoin is profitable or at a loss at any given time, and the extent of the profitability or loss. NUPL describes the overall profitability and loss of BTC by calculating the difference between the current market value and the realized market value, expressed as (Market Cap – Realized Cap) / Market Cap. The realized market value is the cumulative sum of prices from the previous movement of Bitcoin. Subtracting the realized market value from the current market value gives the unrealized market value. If the unrealized market value is negative, it indicates an overall loss in the market; if it is positive, it indicates an overall profit. Dividing the unrealized profit or loss by the current market value gives the specific value of NUPL. The smaller the profit and the larger the loss, the closer it is to the bottom; the larger the profit and the smaller the loss, the closer it is to the top.
NUPL is divided into five zones: the red zone is below 0, indicating a loss area and a buying zone. The orange zone is between 0 and 0.25, indicating a slight profit area. The yellow zone is between 0.25 and 0.5. The green zone is between 0.5 and 0.75. The blue zone is above 0.75. Generally, below 0.25 is considered a good buying zone, while above 0.5 may indicate the start of a bull market.
Looking at history, it can be seen that NUPL provides a good indication of the bottom area. In the second half of 2022, NUPL remained below 0. As for the top zone, the indication is relatively broad. In the 2017 bull market, the blue zone was touched very briefly, while in 2021, the entire bull market ran in the green zone. This increases the difficulty of judging the top zone.
In terms of our current position, from early December to early January, BTC was in the green zone, then dropped to the yellow zone for nearly a month, and re-entered the green zone on February 7th. Currently, it is the second time in this cycle that BTC has entered the green zone, lasting for nearly a month.
From the observation of history, it can be seen that during the period from December 2016 to January 2018, NUPL was mostly in the green zone. During this period, BTC rose from $780 to $17,000, an increase of about 21 times.
From October 2020 to May 2021, and from August 2021 to December 2021, NUPL was also in the green zone. During the period from October 2020 to May 2021, BTC rose from $13,000 to $63,000, an increase of about 4.8 times.
In terms of duration, the green zone lasted for more than 10 months.
It is worth noting that the start of the previous two bull markets occurred after the halving event. Comparing this year, BTC was already close to a new high before the halving event, and NUPL has been in the green zone for over 2 months. This time, it is not as simple as following the trend after the halving event.
In the previous two bull markets, the halving event had a significant impact on BTC’s production, resulting in a significant decrease in supply and an increase in mining costs, leading to a supply shortage and price increase. In this bull market, most of the BTC has already entered circulation, reducing the impact of the halving event on the supply. At this time, the approval of BTC ETF has brought in a large number of buyers, creating a supply shortage and triggering the early start of the market. BTC’s market will be more influenced by US monetary policy and the US stock market.
The Long/Short-Term Holder Threshold indicator focuses on the change in the long-term and short-term holdings of BTC. Long-term holders refer to BTC that has not been moved in the same address for more than 155 days, while short-term holders refer to BTC that has been moved within 155 days in the same address. The change in this indicator can indicate when long-term holders are accumulating or selling tokens.
Currently, the total amount of long-term held BTC is approximately 14.5 million, while the total amount of short-term held BTC is approximately 2.87 million, indicating that around 83% of BTC is in a long-term holding state.
Looking at history, it can be seen that when BTC reached $900 in early January 2017, close to the previous bull market high of $1,000 at the end of 2013, long-term holders began to sell off their BTC. The selling trend continued until early 2018. Correspondingly, the number of short-term held BTC increased significantly.
Throughout 2018, BTC was in a downtrend, and long-term holders continued to accumulate BTC during this period.
In April 2019, after BTC broke through $5,000, long-term holders started to sell off their BTC. The accumulation trend continued until August 2019, when BTC experienced a decline, and the accumulated amount increased all the way until 2020.
In October 2020, after BTC broke through $11,000, long-term holders began to sell off their BTC. The selling trend continued until April 2021.
In November 2021 and June 2022, long-term holders experienced brief declines, but then continued to show a trend of growth.
In early December 2023, long-term holders started to sell off their BTC. The amount decreased from the peak of 14.98 million to 14.5 million, a decrease of approximately 500,000. Currently, this trend is still ongoing.
BTC’s dominance in the cryptocurrency market (BTC.D) is currently at 53.87%.
Looking at historical data, it can be seen that BTC’s market dominance increases during bear markets and decreases during bull markets. The low points in the 2017 and 2021 bull markets were around 40%.
In each bear market cycle, BTC’s dominance gradually decreases, forming a trendline. The current dominance is still within the range of the trendline. Since the start of this bear market, the highest dominance has been around 54%.
At the peak of a bull market, BTC’s dominance should decrease to around 40%. Currently, there is no clear downward trend in BTC’s dominance.
In conclusion, when NUPL is above 0.5, BTC hodlers’ addresses have realized profits of more than 50%. The periods when BTCNUPL was above 0.5 in the 2017 and 2021 bull markets lasted for 14 months and 11 months, respectively, and occurred after the halving event. This year, BTC has been in a generally profitable zone for over 2 months, and the market is different from previous years, with a potentially greater influence from US monetary policy and the US stock market. For example, the timing of interest rate cuts may bring about a market correction.
Looking at the Long/Short-Term Holder Threshold, long-term holders of BTC are currently at a historical high. However, starting from December 2023, long-term holders have gradually started to sell off BTC. This behavior is similar to what happened in 2017 and 2020. Long-term holders will continue to sell off BTC between the previous bull market high and the current bull market high.
From the perspective of BTC’s dominance in the market, the current dominance is still at a relatively high level, and there is no clear downward trend yet, indicating that the altcoin season’s main uptrend has not started.
Overall, BTC is in the early stage of the main uptrend, and the altcoin season’s main uptrend has not yet started.
