Bitcoin’s Realized Price Hits New High as Short-Term Holders Cash In

Bitcoin has reached a new milestone in its on-chain valuation, as measured by the Realized Price metric. According to data from Glassnode, a blockchain analytics platform, Bitcoin’s Realized Price has increased by 1.5% in the past week, reaching $23,230 as of February 14, 2024. This means that the average price paid for each Bitcoin in circulation is now at its highest level ever.

The Realized Price metric is calculated by multiplying the price at which each coin last moved on the blockchain by the size of each transaction, and then dividing the sum by the total supply. It is different from the market price, which is determined by the supply and demand dynamics on exchanges and other platforms. The Realized Price reflects the aggregate cost basis of all Bitcoin holders, and can be seen as a measure of their confidence and conviction in the asset.

Short Term Holder Realized Price | Source: Glassnode

One of the factors driving the increase in Bitcoin’s Realized Price is the rising value of the coins held by short-term holders, who have moved their coins within the last 155 days. Glassnode’s Short-Term Holder Realized Price (STH RP) metric shows that the average acquisition price for this segment of the market has risen by 12.5% in the past week, reaching $52,800. This is a significant rate of appreciation, which has only been observed a few times in the past year.

The surge in STH RP coincides with another major market development—the breakthrough of Bitcoin’s price above the $52,000 level, which pushed its market capitalization above $1 trillion for the first time in history. This historic event has likely triggered a wave of profit-taking by short-term holders, who have increased their supply on the market by 400,000 coins in a relatively short period, according to Glassnode. This implies that some of the recent buyers are cashing in on their gains, while others are holding on for higher prices.

Short Term Holder Supply | Source: Glassnode

The contrast between the behavior of short-term and long-term holders, who have not moved their coins for more than 155 days, can be seen in Glassnode’s Realized Cap HODL Waves chart, which shows the distribution of the Realized Cap by the age of the coins. The chart reveals that the share of the Realized Cap held by long-term holders has decreased from 86% to 82% in the past month, while the share of the Realized Cap held by short-term holders has increased from 14% to 18%. This suggests that there is a transfer of wealth from long-term to short-term holders, as the former sell to the latter at higher prices.

However, this does not necessarily mean that the long-term holders are losing faith in Bitcoin, or that the short-term holders are bearish. On the contrary, it could indicate that the long-term holders are taking advantage of the market conditions to rebalance their portfolios, diversify their assets, or realize some of their unrealized profits. Meanwhile, the short-term holders could be optimistic about the future prospects of Bitcoin, and are willing to pay a premium to acquire more coins. In fact, Glassnode’s Net Unrealized Profit/Loss (NUPL) metric, which measures the difference between the current market price and the Realized Price, shows that both segments of the market are still in a state of net profit, with NUPL values above zero.

Therefore, the increase in Bitcoin’s Realized Price, and the divergence between the short-term and long-term holders, could be seen as signs of a healthy and dynamic market, where different participants have different strategies, expectations, and risk preferences. As Bitcoin continues to grow in adoption, value, and innovation, it is likely that the on-chain metrics will reflect the diversity and complexity of the Bitcoin ecosystem.

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