Bitcoin Dominance Soars to 56%, Long-Term Holders Remain Resolute

Bitcoin
(BTC)
continues
to
expand
its
dominance
in
the
cryptocurrency
market,
now
commanding
a
staggering
56%
of
the
total
market
capitalization,
according
to
Glassnode
Insights.
The
data
reveals
that
long-term
holders
remain
steadfast
in
their
conviction,
contributing
to
significant
accumulation
pressure
beneath
the
surface.

Market
Overview

Since
the
cycle
low
established
in
November
2022,
capital
has
increasingly
accrued
towards
major
assets
in
the
digital
asset
risk
curve.
Bitcoin’s
dominance
has
surged
from
38%
in
November
2022
to
56%
today.
Ethereum
(ETH),
the
second-largest
asset,
has
seen
a
slight
decline
in
dominance,
dropping
1.5%
over
the
past
two
years.
Meanwhile,
stablecoins
and
the
broader
altcoin
sector
have
experienced
more
pronounced
declines
of
9.9%
and
5.9%,
respectively.

This
shift
in
market
dynamics
is
further
highlighted
by
the
net
capital
change
across
major
assets.
Bitcoin,
Ethereum,
and
stablecoins
are
all
exhibiting
a
net
positive
capital
inflow.
Despite
the
general
market
contraction
since
the
March
all-time
high
(ATH),
only
34%
of
trading
days
have
seen
a
larger
30-day
USD
inflow.

Long-Term
Holders

Long-term
holders
have
been
locking
in
a
consistent
$138
million
in
profit
per
day
amidst
recent
market
turbulence.
This
sell-side
pressure
is
indicative
of
the
daily
capital
inflows
required
to
absorb
supply
and
stabilize
prices.
Despite
choppy
market
conditions,
prices
have
remained
relatively
flat
over
the
last
few
months,
suggesting
a
form
of
equilibrium
is
being
reached.

The
Realized
Profit/Loss
Ratio
for
long-term
holders
remains
elevated
but
is
experiencing
a
substantial
decline
from
its
peak.
This
indicates
that
profit-taking
activities
by
long-term
investors
are
cooling
off.
During
the
March
2024
ATH,
this
metric
reached
levels
similar
to
prior
market
tops,
suggesting
a
potential
for
future
uptrend
in
prices.

A
Psychological
Correlation

Short-term
holders,
on
the
other
hand,
are
experiencing
significant
unrealized
financial
stress.
The
Short-Term
Holder
Market
Value
to
Realized
Value
(STH-MVRV)
ratio
has
contracted
below
the
equilibrium
value
of
1.0
in
recent
weeks,
indicating
that
the
average
new
investor
is
now
holding
an
unrealized
loss.
Sustained
periods
where
the
STH-MVRV
trades
below
1.0
can
lead
to
increased
investor
panic
and
potentially
severe
bearish
market
trends.

With
unrealized
losses
mounting,
the
expectation
of
eventual
investor
capitulation
grows.
Such
events
are
characterized
by
large
losses
being
locked
in
through
spent
coins.
The
Short-Term
Holder
Spent
Output
Profit
Ratio
(STH-SOPR)
is
also
trading
below
1.0,
indicating
realized
loss-taking
activities
by
new
investors.

Navigating
Investor
Cycles

When
evaluating
the
Relative
Unrealized
Loss
metric
for
new
investors,
it
is
evident
that
the
magnitude
of
unrealized
financial
stress
remains
relatively
low
compared
to
historical
capitulation
events.
However,
realized
losses
have
been
trickling
higher,
highlighting
a
moderate
overreaction
in
the
market.

During
cyclical
price
lows,
the
magnitude
of
realized
and
unrealized
loss
tends
to
spike
to
between
10%
and
60%
of
total
short-term
holder
holdings.
Currently,
the
magnitude
of
these
losses
remains
relatively
small
compared
to
previous
major
bottom-forming
events.
This
suggests
that
the
hit
to
investor
sentiment
may
not
be
as
severe
as
it
appears
at
face
value.

Summary
and
Conclusions

Despite
the
prevailing
uncertainty
among
market
investors,
capital
continues
to
flow
towards
Bitcoin,
leading
to
a
significant
expansion
in
its
dominance.
Long-term
holders
remain
resolute,
with
a
clear
preference
to
hold
and
acquire
more
coins.
Conversely,
short-term
holders
have
borne
the
majority
of
recent
losses,
though
the
degree
of
locked-in
losses
suggests
a
potential
overreaction
to
the
market
downturn.

Disclaimer:
This
report
does
not
provide
any
investment
advice.
All
data
is
provided
for
informational
and
educational
purposes
only.
No
investment
decision
should
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,
amassed
through
both
officially
published
exchange
information
and
proprietary
clustering
algorithms.
While
we
strive
to
ensure
accuracy,
these
figures
might
not
always
encapsulate
the
entirety
of
an
exchange’s
reserves,
particularly
when
exchanges
refrain
from
disclosing
their
official
addresses.
Users
should
exercise
caution
and
discretion
when
utilizing
these
metrics.
Glassnode
shall
not
be
held
responsible
for
any
discrepancies
or
potential
inaccuracies.

Glassnode
Insights.

Image
source:
Shutterstock