Bitcoin investors with short-term holdings edge closer to cashing out as network activity experiences a decline
In the recent Bitcoin rally, short-term investor behavior has garnered significant attention. On-chain data highlights elevated unrealized profits among investors who purchased Bitcoin within the past few months, potentially leading to increased selling pressure.
According to blockchain analytics, these short-term holders currently enjoy an average unrealized gain of 27%, reaching levels that could point to increased selling if historical trends persist. Analyst Axel Adler Jr., referring to data from CryptoQuant, notes that when the short-term holder Net Unrealized Profit/Loss (NUPL) metric surpasses 40%, profit-taking often commences, potentially resulting in price corrections.
With the growth rate at around 0.818% points per day, this level may be reached within approximately 16 days, projecting a potential NUPL of 40% by June 11, 2025. This could hypothetically push Bitcoin prices close to $162,000.
Historical market tops for Bitcoin have frequently correlated with increased profits among short-term holders. For example, in November 2021, when this cohort's NUPL margin reached 47%, Bitcoin experienced a local high followed by a correction. Similar price corrections were observed in March 2022 (44%), July 2023 (47%), and notably in March 2024, when the metric peaked at 66%.
After these events, prices and the NUPL dropped, reflecting a shift from high profits to losses. Current profits sit in the profit zone, but not yet at levels that have previously caused significant disturbances. Continual monitoring is essential as the indicator nears significant values.
Despite high prices, transaction data indicates that Bitcoin's network activity has been lower since prices surpassed $90,000. From mid-2023 to early 2024, the number of daily active addresses regularly exceeded 1 million; however, since mid-2024, this number has dropped between 700,000 and 900,000.
Some analysts attribute this divergence between price and user engagement to reduced retail participation. The rise in unrealized profits coincides with decreasing active addresses, potentially signaling a reliance on off-chain markets like institutional investment platforms or derivative instruments rather than organic user adoption.
If current trends continue, Bitcoin may approach its short-term holder profit threshold by mid-June. Market participants are closely watching the NUPL, as its crossing the 40% mark could signal the start of another sell phase.
- The short-term holders of Bitcoin, who currently enjoy an average unrealized gain of 27%, may be considering investing their profits into other assets such as stocks or real estate, given the increasing popularity of cryptocurrencies like Bitcoin in the finance and investing world.
- The rise in unrealized profits among short-term Bitcoin holders has also been observed in other digital assets, leading some analysts to propose that blockchain technology could revolutionize traditional finance by enabling more efficient and secure investing.
- Whale investors, who hold large amounts of Bitcoin, have been keeping a close eye on the short-term holder Net Unrealized Profit/Loss (NUPL) metric, as they see it as a potential indication of whether it's the right time to buy or sell Bitcoin in the crypto market, given its correlation with Bitcoin's historical market tops.
