- BTC’s long-term MVRV was below 6% at the time of writing.
- BTC could soon see a capitulation or accumulation depending on the response of its holders.
Despite Bitcoin [BTC] The relatively stable price in recent months suggested key on-chain metrics underlying challenges that could impact the market.
One concerning indicator is the long-term holder’s net unrealized gain/loss (LTH-NUPL).
Moreover, the long-term market value to realized value (MVRV) ratio has remained below zero in recent weeks.
Declining Bitcoin Profitability
An analysis of the long-term holder’s net unrealized gain/loss (LTH-NUPL) on Glass junction revealed that long-term Bitcoin holders experienced a significant drop in profitability at the time of writing.
This trend could be a critical indicator of the future direction of the market.
Around March 2024, Bitcoin and LTH-NUPL prices peaked, indicating that many long-term holders were sitting on substantial unrealized gains.
However, after this peak, both the price and LTH-NUPL began to decline, indicating that the market may have experienced significant profit-taking.
Source: Glassnode
From June to August 2024, LTH-NUPL continued to decline, closely matching BTC’s downward price trend.
As of August 2024, LTH-NUPL is at the lower end of the spectrum, indicating that the profits of many long-term holders have fallen significantly.
What this could mean for Bitcoin
This situation could indicate that the market is approaching a critical juncture. It could be approaching a point of capitulation, where holders may start selling their holdings to avoid further losses.
Furthermore, the price could be approaching a potential bottom, where new accumulation could occur as investors look for buying opportunities.
The LTH-NUPL specifically measures the long-term unrealized gain or loss of Bitcoin holders.
A high NUPL value indicates that the majority of coins held by this group are making a profit, potentially leading to profit taking and a market correction.
Conversely, a low or negative NUPL value implies that more coins are being held at a loss, which could lead to capitulation or provide a buying opportunity for investors.
LTH profits are falling
AMBCrypto’s analysis of Bitcoin’s 90-day market value to realized value (MVRV) revealed that long-term holders were at a loss at the time of writing.
The trend reinforces the findings from the Long-Term Holder Net Unrealized Profit/Loss (LTH-NUPL) analysis.
Additionally, the 90-day MVRV has been below zero since August 1 and was approximately -6.6% at the time of writing.
This indicated that investors who bought Bitcoin during this period had an average loss of over 6%.
Source: Santiment
Read Bitcoin’s [BTC] Price forecast 2024-25
The persistently negative MVRV indicates that long-term holders were experiencing financial pressure, which could impact their decision-making in the short term.
This trend is crucial because how these holders respond – whether by selling their holdings to minimize losses or by holding on while waiting for a market recovery – will have a significant impact on Bitcoin’s price direction.