Bitcoin: Long-term profitability of bitcoin holders has shocking statistics for BTC Maxis

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Bitcoin: Long-term profitability of bitcoin holders has shocking statistics for BTC Maxis

Enthusiastic Bitcoin [BTC] traders may have noticed that BTC volatility has dropped to a significant extent. Not too long ago, BTC would make big moves where the price would increase with large profit margins, giving decent returns to long-term holders. Fast-forward to the present: being a long-term BTC holder is not very profitable.

A recent analysis by Glassnode summed up the drop in returns for long-term BTC holders. Based on analysis, long-term headline returns have fallen to levels previously seen in December 2018.

This is the time when the market bottomed out in the previous bear cycle. The report also claims that long-term holders are selling with an average loss of 42% based on long-term holders' SOPR metrics.


The assessment coincides with BTC's performance, especially in the last three months. The cryptocurrency has struggled to recover from the bottom of the range, with prices above $25,000 now a thing of the past. BTC’s latest performance also shows a larger relationship for prices below $20,000.


Alternatively, BTC's current range could explain why long-term holders choose to switch from a long-term strategy. So far, the cryptocurrency has maintained a healthy level of volatility within its current range.

As a result, long-term investors chose to exit their positions to avoid losing short-term profits.

BTC miners are among those affected by the transition from long-term profits to short-term income. Traditionally, they used to wait for the price to rise to make a higher profit, but that is no longer the case. Mineral reserves have been caught in a short-term sell-off, especially in recent weeks.

Source: CryptoQuant

The pressure on mineral reserves has led to a general decrease in the amount of minerals, especially in the past 10 days. An interesting dynamic is also observed between mining reserves and foreign exchange reserves.

Exchange reserves increase many times as miners' reserves decrease, thus creating an inverse relationship. This is because the market has taken the flow of mineral reserves as a signal to sell.

Macro factors affecting BTC 

Recently, mineral reserves have also been hit hard by miners' need to cover mining costs. Therefore, they are forced to sell many times, regardless of BTC rising or falling. Macro factors also come into play when it comes to BTC's price action.

Economic factors such as inflation also have a large impact on investment decisions. For example, prevailing market conditions in recent months have led to a shift from risky assets to risk-free assets.

The effects of inflation have forced many traders away from BTC and other risky assets and many have kept the dollar in place. This further explains why the dollar has strengthened.

It could take months to bring inflation under control and this could affect BTC's ability to recover to previous highs. The upside to this situation is that a long-term investor's return to bearish 2018 levels could mean the market is nearing the bottom of the current bear cycle.


Sep 30, 2022

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