Bitcoin (BTC) Profitability Robust Despite Declining Market Volumes

Despite
choppy
price
action,
the
unrealized
profit
of
Bitcoin
(BTC)
investors
remains
constructive.
However,
volumes
across
all
market
facets
are
declining
markedly
as
an
equilibrium
between
demand
and
sell-side
forces
is
established,
according
to

Glassnode
Insights.

Market
Profitability
Remains
Robust

Sideways
price
movement
tends
to
manifest
as
investor
boredom
and
apathy,
which
appears
to
be
the
dominant
response
across
all
Bitcoin
markets.
BTC
prices
are
consolidating
within
a
well-established
trade
range.
Investors
remain
in
a
generally
favorable
position,
with
over
87%
of
the
circulating
supply
held
in
profit,
with
a
cost
basis
below
the
spot
price.

Employing
the
MVRV
metric,
the
average
coin
holds
an
unrealized
profit
of
around
+120%,
typical
of
previous
markets
trading
around
the
previous
cycle
ATH.
The
MVRV
Ratio
remains
above
its
yearly
baseline,
suggesting
that
the
macro
uptrend
remains
intact.

Currently,
the
BTC
price
is
stabilizing
and
consolidating
between
the
0.5
and
1
standard
deviation
range.
This
again
highlights
the
statistically
high
profit
the
average
investor
is
holding
despite
the
recent
choppy
market
conditions.

Lackluster
Volume

Despite
healthy
investor
profitability,
the
magnitude
of
volume
being
processed
and
transferred
on
the
Bitcoin
Network
following
the
ATH
has
declined
drastically.
This
underscores
a
reduced
appetite
for
speculation
and
heightened
indecision
in
the
market.

A
similar
story
can
be
observed
when
assessing
the
Spot
Volume
traded
across
major
centralized
exchanges.
This
demonstrates
the
strong
correlation
between
on-chain
network
settlement
volumes
and
trade
volumes,
echoing
a
sentiment
of
boredom
amongst
investors.

Exchange
Activity
Tumbles

Moving
one
level
deeper,
on-chain
inflows
to
exchanges
in
a
BTC
denomination
show
a
considerable
reduction
in
activity.
Short-Term
Holders
are
currently
sending
around
+17.4k
BTC/day
to
exchanges,
markedly
lower
than
the
peak
of
+55k
BTC/day
recorded
as
the
market
hit
the
$73k
ATH
in
March.
Conversely,
Long-Term
Holder
distribution
into
exchanges
is
relatively
low,
with
only
a
marginal
1k+
BTC/day
in
inflows
currently.

More
coins
are
currently
being
transferred
in
a
position
of
profit
(+11k
BTC)
than
in
loss
(+8.2k
BTC),
suggesting
that
a
profit-driven
bias
remains
overall,
albeit
by
a
relatively
small
margin.
The
average
coin
sent
to
exchanges
is
realizing
a
profit
of
around
+$5.5k
and
a
-$735
haircut
for
coins
sent
in
the
loss.
This
infers
that
HODLers
are
still
divesting,
and
demand
is
sufficient
to
absorb
sell-side
pressure
but
not
large
enough
to
push
market
prices
higher.

Cash
and
Carry
Basis
Trades

Another
tool
that
enables
characterization
of
spot
markets
is
the
Spot
Cumulative
Volume
Delta
(CVD).
This
metric
describes
the
net
bias
in
market
taker
buy
vs.
sell
volume,
measured
in
USD.
At
the
moment,
a
net
sell-side
bias
dominates
the
spot
market,
however,
the
market
continues
to
trend
sideways,
indicating
that
the
demand-side
is
approximately
equivalent
to
the
sell-side
pressure,
keeping
the
market
range
bound.

In
the
futures
market,
there
is
a
sustained
elevation
in
open
interest,
currently
over
$30B,
just
shy
of
its
previous
ATH.
However,
a
substantial
portion
of
this
open
interest
is
related
to
the
market-neutral
cash-and-carry
basis
trade.
The
considerable
growth
of
open
interest
at
the
CME
Group
exchange
highlights
a
growing
presence
of
institutional
investors.
The
CME
Group
exchange
currently
hosts
over
$10B
in
OI,
representing
just
under
a
third
of
the
global
market
share.

Despite
the
rising
open
interest,
futures
trade
volumes
have
experienced
a
similar
decline
to
spot
markets
and
on-chain
transfer
volumes.
This
suggests
a
relatively
light
appetite
for
speculation,
and
a
higher
dominance
from
set-and-forget
basis
trade
and
arbitrage
positions.

Summary
and
Conclusions

Despite
the
choppy
and
sideways
market
conditions,
the
average
Bitcoin
investor
has
remained
largely
profitable.
However,
investor
decisiveness
has
declined
as
signified
by
contracting
volumes
across
spot,
derivatives
markets,
and
on-chain
settlement.

An
equilibrium
in
both
the
demand
and
sell-side
appears
to
be
established,
resulting
in
relatively
stable
prices
and
a
notable
lack
of
volatility.
This
stagnation
in
market
movement
translates
into
a
degree
of
boredom,
apathy,
and
indecision
by
investors.
Historically,
this
suggests
that
a
decisive
price
movement
in
either
direction
is
necessary
to
stimulate
the
next
round
of
market
activity.

Disclaimer:
This
report
does
not
provide
any
investment
advice.
All
data
is
provided
for
information
and
educational
purposes
only.
No
investment
decision
shall
be
based
on
the
information
provided
here
and
you
are
solely
responsible
for
your
own
investment
decisions.

Exchange
balances
presented
are
derived
from
Glassnode’s
comprehensive
database
of
address
labels,
which
are
amassed
through
both
officially
published
exchange
information
and
proprietary
clustering
algorithms.
While
we
strive
to
ensure
the
utmost
accuracy
in
representing
exchange
balances,
it
is
important
to
note
that
these
figures
might
not
always
encapsulate
the
entirety
of
an
exchange’s
reserves,
particularly
when
exchanges
refrain
from
disclosing
their
official
addresses.
We
urge
users
to
exercise
caution
and
discretion
when
utilizing
these
metrics.
Glassnode
shall
not
be
held
responsible
for
any
discrepancies
or
potential
inaccuracies.

Image
source:
Shutterstock