Glassnode observes profits among BTC holders despite the recent market slump

• Glassnode says three-quarters of Bitcoin addresses are in profit even though the markets are struggling
• Short-term holders are seeing reduced loss realisation, with a current figure of 8.3k BTC per day

This week’s edition of the Week On-Chain newsletter by Glassnode has evaluated the development and ‘health’ of Bitcoin’s user base as indicated by on-chain activity and profitability of the network.

The report, published on Monday, found that despite the recent bearish condition, the current market is performing better than the previous bear markets. Comparisons show less severity given that just between 25% to 30% of the market sits at an unrealised loss; however, warning that should sell-side pressure increase, the situation could change for the worse.

“The current bear market is not as severe as the worst phases of all prior cycles, with just 25% to 30% of the market being at an unrealised loss. It remains to be seen if further sell-side pressure will drive the market lower, and thus pull more of the market into an unrealised loss like prior cycles,” the report read.

The report showed network profitability has been rising in the worst periods of consecutive extended bear markets, from 30%-42% in 2015 to 45%-50% in 2018 and 51-56% during the March 2020 bear market. The rising trend now places three-quarters of all addresses holding Bitcoin in profit despite the 2021/2022 market slump.  

“…network profitability has improved, indicating significant re-accumulation took place since January. The aggregate profitability of the network remains in a far healthier position compared to prior bear cycles.”

Long term holders vs. short term holders

As far as token supply is concerned, Glassnode noted that in a bear market, long-term holders (LTHs) are most likely to hodl having sustained serious bleeding markets in the past – 2018 and 2020. Currently, 13.7% of the supply in unrealised loss is handled by LTHs, a proportion that has previously skied as high as 35%.

“The proportion of LTH coins held at a loss reached over 35% of supply in the depths of previous bear cycles, which is 2.5x more relative coin volume than we have in the current market.“

For short-term holders (STHs), there has been a significant increase in profitability. The daily realised loss has declined with the current rally, recovering from when all tokens in the hands of STHs were at a loss in January this year.

Also, profit-taking is on the rise, with realised losses climbing down to 8,300 BTC per day, down from about 20,000 BTC per day. Glassnode explained that such high and continual loss realisation is characteristic of any bear market.