Glassnode notes short-term holder profit share drops to 70% October 27

This shift suggests that Bitcoin might present a much more favorable point of entry for investors anticipating the cryptocurrency's upward trajectory, especially when compared to the situation a month ago, as noted in an October 27 market update.

Those investors who have held Bitcoin for less than 155 days are generally categorized as short-term holders, and their profitability is closely monitored because these recent purchasers tend to react swiftly to price changes, potentially selling when their assets generate significant profits. In late September, almost all of this group's Bitcoin was profitable, which previously gave investors an opportunity to secure gains as prices rebounded. However, the subsequent market dip has diminished the fraction of coins trading above their purchase prices. Glassnode's analysis indicates that these recent buyers now have less unrealized profit available to realize, though the firm offered no guarantee regarding Bitcoin's ability to recover from its current valuation.

The firm's most recent chart reveals that the percentage of short-term holder supply sitting in profit has fallen beneath a level historically linked to heightened selling activity. This cooling trend follows a period where recent buyers exhibited considerable selling, particularly when Bitcoin attempted to climb above $85,000 earlier this month. In its October 7 market report, Glassnode observed that approximately 86% of all Bitcoin moved to exchanges on October 4 was being sold for a profit, marking the highest proportion seen in a year. This selling occurred just as Bitcoin first surpassed $85,000 during that recovery surge, prompting some investors who bought coins months prior to take profits. Yet, the pace of selling has since slowed down considerably.

Further data from Glassnode's October 21 Week On-Chain report showed that the realization of profits had dropped to about half the level recorded during the week of Bitcoin's September peak. Meanwhile, realized losses remained relatively steady; the largest losses during the preceding week materialized as Bitcoin neared $80,000 on October 15. The analysis also found that selling among investors who acquired their Bitcoin one to two years before had decelerated, with this cohort moving less than a third of the daily coin volume compared to its peak in early October.

Despite the improvement in the profitability metrics for short-term holders, Bitcoin continues to encounter resistance from selling pressure at elevated price points. Glassnode's October 21 examination pinpointed a significant barrier zone situated between $85,000 and $87,500, where several key market indicators were tightly grouped. Investors who bought Bitcoin between six and twelve months ago held an average cost basis close to $86,700, while exchange sell orders were densely clustered in the range of roughly $86,500 to $87,500. Furthermore, large liquidation clusters were concentrated near $85,000 and $87,000, a situation that could inject volatility should Bitcoin attempt another rally.

Looking toward the downside, the analytics firm identified buying interest around the $80,000 mark after Bitcoin briefly touched that level on October 15. This price area held particular importance because the estimated average acquisition costs for both US spot Bitcoin ETF investors and corporate treasury holders were concentrated between $80,000 and $81,500. Nevertheless, Bitcoin has since failed to sustain support at that level.

More recently, as reported by crypto.news, Bitcoin dipped below $80,000 on October 26, hitting an intraday low near $79,332, with prices being pressured by renewed ETF withdrawals and leveraged liquidations. In its October 21 assessment, Glassnode's True Market Mean, which gauges the average acquisition cost of actively traded Bitcoin, stood near $77,600.

Institutional interest has emerged as another source of concern as Bitcoin battles to regain momentum. Although US spot Bitcoin ETFs saw considerable capital inflows earlier in October, including a strong buying period on October 19, the subsequent rise in demand proved inconsistent. According to recent Bitcoin ETF flow data, the funds attracted $524.8 million on October 21 but subsequently saw $635.6 million exit the funds the next day. An additional $137.9 million left the funds on October 23, resulting in total outflows of $773.5 million across those two days; however, the ETFs concluded the five-session span with an approximate net inflow of $301.2 million.

The decline below the $80,000 threshold has also brought the Federal Reserve's upcoming interest rate determination on October 28 into sharp focus. The central bank is set to release its decision following a two-day policy meeting, and investors are keenly awaiting any indications regarding the future path of interest rates. Additionally, the September Personal Consumption Expenditures inflation report is scheduled for October 29, followed by a major Bitcoin options expiry on October 30.

Why it matters

The easing selling pressure from short-term holders could signal a better entry point for buyers expecting an uptrend. However, significant resistance levels and recent ETF outflows suggest continued volatility ahead of key economic data. Investors should watch the Federal Reserve's October 28 interest rate decision.