Bitcoin‘s ascent towards $71,375 on March 26, edging closer to its historic peak, encountered a slowdown attributed to heightened profit-taking actions, as per insights from Glassnode.
In a newsletter received, the analytics firm highlighted several on-chain indicators signaling an increase in profit-taking incidents.
Glassnode’s analysis unveiled that as Bitcoin’s value retraced from its pinnacle to a recent dip at $61,200, approximately 2.0 million Bitcoin transitioned from ‘in-profit’ to ‘in-loss’ status. However, with a slight market rebound, about 1.0 million of these coins reverted to ‘in-profit’ status due to robust transaction volumes at these elevated price tiers.
This behavior, according to Glassnode, represents one of the more conspicuous ‘supply clusters’ observed during retractions since the lows of 2022.
The analytics firm emphasized that a significant proportion of the 2.0 million Bitcoin, now with a revised cost basis exceeding $61,200, had recently changed hands. This activity, the newsletter suggested, indicates prior owners actively seizing profits.
This trend was further underscored by fluctuations in the Spent Output Profit Ratio (SOPR) metric outlined in the newsletter, demonstrating an uptick in profit-taking in spot markets. Particularly, the Entity-Adjusted SOPR variant has approached levels reminiscent of the peak of the 2021 bull market, solidifying Glassnode’s profit-taking hypothesis.
During the rally to the $73.2k all-time high, analysts observed over $2.6 billion in realized profit secured through on-chain transactions. The analytics firm attributed 40% of this profit-taking to Long-Term Holders.
Glassnode speculates that some of these investors may include individuals divesting from the Grayscale Bitcoin Trust (GBTC). Since its conversion to a spot ETF, the Grayscale GBTC fund has witnessed approximately 277,393 BTC in outflows as of March 27.
Meanwhile, short-term holders reportedly locked in the remaining $1.56 billion in profits. The report added that traders were capitalizing on inflowing liquidity and bullish momentum, mirroring past market cycles.
“Realized profit by both cohorts has reached a similar magnitude to during the 2021 bull market peak.”
Glassnode concluded its analysis by stating that the recent trend is not unusual market behavior. Historical data indicates similar patterns during all previous all-time high cycles, it added.
“Each time the Bitcoin price is at, or close to, an all-time high, there’s a division between those wanting to take money off the table and those betting on further increases. It becomes a tug-of-war between Bulls and Bears,” said Clive Thompson, a former director in Swiss banking and Bitcoin proponent.
This dichotomy often results in a temporary market pause, a phenomenon Thompson deems “perfectly normal” near all-time highs.
Thompson also highlighted the recent shift in ETF inflows, which turned positive on Tuesday, March 26, after a week of outflows. This contributed to a modest positive effect on the Bitcoin price, still below its all-time high of $74,000.
“Should the inflows to the ETFs remain positive, we’re likely to see the Bitcoin price surpass previous records and climb higher,” he added.
Glassnode’s observations come amidst a recuperative phase in the cryptocurrency market. Recent reports indicate that Spot Bitcoin ETFs have witnessed inflows amounting to $418 million, marking the largest influx since March 13.
