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93% Drop in Realized Profits for BTC: Market Signal for a New Bullish Move

After testing the low price level of $90,000 several times over the past two months, Bitcoin (BTC) briefly broke out of its tight trading range earlier this week, reaching a new all-time high (ATH) of $108,786. However, a recently published report by Glassnode suggests that the prolonged consolidation seen over the past months may be nearing its end, with the leading cryptocurrency poised for its next significant move.

Sharp Decline in Realized Profits for Bitcoin
According to the latest edition of Glassnode’s “The Week On-Chain Report,” the volumes of realized profits from BTC have dropped significantly, falling from a peak of $4.5 billion in December to approximately $316.7 million — a sharp 93% decline.

This decline in realized profits signals a significant reduction in selling pressure for Bitcoin. Currently, BTC is trading within a narrow 60-day price range – a pattern that often precedes significant market volatility. When Bitcoin trades within a tight price range, it either signals the beginning of a new bullish move or the final stages of bearish capitulation. One of the key indicators highlighted in the report is the Realized Supply Density, which measures the concentration of Bitcoin supply around the current spot price within a 15% range up and down. Currently, approximately 20% of Bitcoin’s supply is within this price range, indicating increased price sensitivity. Small price movements within this range can significantly impact the profitability of investors, driving market volatility. The report also highlights the key indicator CoinDay Destruction (CDD) as additional evidence of reduced selling pressure. At the end of December and the beginning of January, CDD values were notably high, reflecting increased activity from long-term holders. However, the indicator has cooled off in recent weeks.

For those unfamiliar, CDD measures the economic activity of spent BTC, tracking how long coins have been held before being moved. It multiplies the number of coins by the number of days they were dormant, highlighting whether long-term holders are spending their coins. The recent decrease in CDD suggests that many BTC investors who intended to take profits have already done so within the current price range. As a result, the market may be entering a new cycle to unlock the next wave of supply and liquidity.

Long-term investors are returning to accumulation mode. The report also highlights the Binary Indicator for Long-Term Holder (LTH) spend, which tracks Bitcoin held by long-term investors. The report notes: “In line with strong profit-taking volumes previously, we see a significant drop in the total supply of LTH when the market hit $100,000 in December. The rate of decline in LTH supply has since stopped, suggesting that this distribution pressure has weakened in recent weeks.” Furthermore, the inflow of LTH into crypto exchanges has sharply decreased, dropping from $526.9 million in December to just $92.3 million. However, the total supply of LTH BTC shows signs of growth, indicating that long-term investors are returning to accumulation mode.

Meanwhile, demand for BTC from retail investors remains strong. Investors holding fewer than 10 BTC collectively purchased approximately 25,600 BTC in the last month. In comparison, Bitcoin miners mined only 13,600 BTC during the same period. As of the time of writing, BTC is trading at $104,207, a 0.5% increase over the last 24 hours.

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