CryptoQuant analyst Axel Adler Jr said on Sept. 29 that Bitcoin’s move toward the $87,000 area has come with weaker profit-taking than the market saw in August, even as price pushed higher.
According to Adler Jr, realized profit during the second rally peak was 19% lower than during the first rally peak, while realized losses also declined over the same stretch.
Realized profit and loss were lower during the second rally peak
At the first rally peak on Aug. 26, BTC traded at about $78,600 and seven-day realized profit reached $9.1 billion. At the second rally peak on Sept. 24, Bitcoin climbed to $84,100, but seven-day realized profit was only $7.3 billion, a 19% drop from the earlier peak.
During the same period, seven-day realized loss fell from $2.6 billion to $1.5 billion. As of Sept. 28, Bitcoin’s net realized profit over the past seven days stood at $4.3 billion.
STH SOPR stayed above 1 as profit margins narrowed
Adler Jr said the short-term holder spent output profit ratio, or STH SOPR, has remained above 1 since Aug. 20. That means BTC transferred by short-term holders has, on the whole, still been moved at a profit, although the size of those profits has been shrinking.
At the Aug. 26 peak, the profit margin implied by STH SOPR was 2.8%. By the Sept. 23 peak, it had fallen to 1.6%, and by Sept. 28 it had dropped again to 1%.
He added that when BTC pulled back to $76,500 on Sept. 17, STH SOPR briefly fell to 1.003, which meant the profit margin on BTC moved by short-term holders narrowed to 0.3%. Even then, the metric did not break below 1, so short-term holders as a group had not shifted into a loss position.
What Adler Jr said to watch next
Adler Jr said higher BTC prices have not led to larger-scale profit-taking. In his view, that may suggest some holders are not in a hurry to sell and may be waiting for higher prices. He also said this indicator alone is not enough to confirm that holders are definitely waiting for a higher level.
He said that if BTC returns to the $87,200 high again, unrealized profit would increase further as long as the cost basis of holdings does not change. The deterioration signal to watch, he said, would be STH SOPR falling below 1 while realized profit and loss metrics turn negative.