A majority of Bitcoin holders are currently seeing positive returns on their investments, but they have refused to realize their gains.
According to this week’s edition of the Bitfinex Alpha report, more than 83% of BTC supply is currently held at a profit. This is the most substantial percentage in profit since November 2021, when bitcoin reached its all-time high of $68,000.
Bitcoin Holders Maintain Their Positions
Bitcoin’s recent surge to new yearly highs has placed a significant portion of the circulating supply in profit. However, the extent of the holders’ unrealized profit is not particularly large. Unrealized profit is the difference between bitcoin’s current and original purchase prices.
Citing data from Glassnode, analysts disclosed that 16.366 million BTC, around 83.7% of the total circulating supply, is currently in profit. The percentage is significantly higher than the all-time average of 74% and is getting closer to the upper limit of the +1 standard deviation band, which is currently around 90%, indicating that the crypto market is in a relatively strong position.
Despite the number of bitcoins in profit, on-chain metrics show a decline in the activity of long-term holders (LTHs), suggesting that this cohort of investors is inclined to hold onto their assets.
Inactive Bitcoin Supply Reaches New Highs
A large portion of BTC’s circulating supply has been dormant for a year as LTHs maintain their positions and short-term holder (STH) supply declines. Approximately 70.35% of BTC supply – 13.65 million BTC – has not been transacted or moved in the past year, indicating a stronger LTH base and a reduction in speculative trading.
The new all-time high tallies with the current Bitcoin velocity, which sits at a historically low level of 15.78. In contrast, the rate hit 80 during the last bear market cycle. The velocity metric measures how frequently BTC is traded or used for transactions.
As the market enters a bullish phase, Bitcoin’s velocity is expected to persist in its downward trend until the leading digital asset begins to approach its previous all-time high.
“It is anticipated that as Bitcoin’s price climbs, the velocity will begin to rise, and the amount of dormant Bitcoin will decrease. This shift will occur as long-term holders start to sell their holdings, converting their ‘paper gains’ into realized profits.”
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