HomeNewsBitcoin's Profitability Dynamics Hint at a Shift as It Approaches $39K

Bitcoin’s Profitability Dynamics Hint at a Shift as It Approaches $39K

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  • Despite a 120% increase this year, Bitcoin (BTC) still hasn’t triggered widespread market FOMO (fear of missing out).
  • Analysis of on-chain data suggests a shift in BTC supply profitability is on the horizon, with a key profit zone near $39K.

As Bitcoin hovers near 18-month highs, surpassing several key resistance levels and maintaining a position well above its bear market trading range, the expected bull market frenzy remains notably absent. Despite the cryptocurrency’s price increase of 120% this year, the market has not witnessed the typical fear of missing out (FOMO) that often accompanies such surges.

Unraveling Bitcoin’s On-Chain Dynamics

Data from Look Into Bitcoin, a statistics platform, indicates that on-chain transactions are gradually involving ‘younger’ Bitcoin. This observation suggests that a new wave of Bitcoin holders is emerging, distinct from speculators who typically hold BTC for short periods.

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Philip Swift, creator of Look Into Bitcoin, highlighted the realized cap HODL waves metric, also known as RHODL waves, to substantiate this trend. The RHODL metric divides Bitcoin’s supply by the age group and compares it to the price at which it last moved on-chain. It reveals spikes in coin movements during bull markets and stagnation during bear periods, signifying investor reluctance to sell at a loss. Swift’s analysis indicates that the recent increase in on-chain transfers hasn’t reached levels that signify widespread market FOMO.

Bitcoin’s Profitability Threshold

A significant focus in the current Bitcoin market analysis is the net unrealized profit/loss (NUPL) indicator. This tool provides profitability ratios for different cohorts of stored coins, offering insights into the financial standing of various Bitcoin holder groups. According to Onchained, a contributor to CryptoQuant, those who increased their Bitcoin holdings during the run-up to the 2021 all-time highs are still ‘underwater.’

Notably, all Bitcoin unspent transaction outputs (UTXOs) age bands are in a profitable state, except for those held for 18 months to 3 years. These holders entered the market during the rally to $67,000 and are approaching a potential break-even point as Bitcoin nears the $39,000 mark. The current data from CryptoQuant shows that only 11.6% of UTXOs are at a loss, which could be a precursor to a significant shift in market dynamics.

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This nuanced view of Bitcoin’s market suggests that while traditional indicators of a bull run, like widespread FOMO, are absent, there are underlying shifts in profitability and holder behavior that could herald significant changes as Bitcoin approaches key price thresholds. As the market continues to evolve, understanding these subtleties becomes crucial in navigating the complex landscape of cryptocurrency investing.

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