Report: investor profitability stays high despite market turbulence

Despite the aggressive market correction, with Bitcoin’s (BTC) value dropping to the lower end of the $65,000 zone and Ethereum (ETH) trading around $3,500, key market metrics remain optimistic.

Notably, Bitcoin is trading at $65,217 at the reporting time, down 3.34% in the past week due to increased selloffs. Meanwhile, Ethereum has set sail on a recovery path, currently trading for $3,534 as it gains by a meager 0.34% over the last seven days

Amid the current market conditions, Glassnode captured the sustained market optimism in its latest weekly report. Notably, the report confirmed that Bitcoin’s price volatility has led to sideways movement, a trend often interpreted as investor apathy. 

Yet, more than 87% of Bitcoin’s circulating supply is still held at a profit. This is evident from the unrealized profits held by Bitcoin investors, who are currently witnessing an average unrealized gain of about 120%, a level seen in past market cycles near all-time highs. 

The Market Value to Realized Value (MVRV) ratio, which measures these unrealized gains, indicates that the uptrend remains intact, with the current stabilization occurring within a standard deviation range that underscores significant profitability for investors.

Moreover, the recent market peak saw substantial profit-taking, especially from long-term holders, which increased the market’s liquid supply. Consequently, the market now requires time to absorb this excess supply. This period of consolidation reduces sell pressure and realized profits, maintaining a balanced market condition.

Bitcoin volume sees sharp decline

Despite healthy investor profits, Bitcoin’s trading volumes on the network and major exchanges have declined. This trend suggests reduced speculative activity and increased market indecision. 

Short-term holders have reduced their exchange deposits compared to the volume witnessed earlier in the year. In addition, long-term holders show minimal activity, indicating a state of equilibrium where significant price changes are needed to trigger more market movement.

Most coins being moved are still in profit, with an average realized gain significantly higher than the losses. This implies that while holders are selling, the demand is sufficient to take on this pressure, though not enough for an upward push. This scenario benefits range traders and arbitrageurs more than those looking for directional moves.

Growth in open interest

Also, the futures market reflects a similar trend of growing open interest, now exceeding $30 billion, close to its previous all-time high. A large part of this open interest is due to demand-neutral strategies like cash-and-carry, which involve profiting from price differences between the spot and futures markets. 

Moreover, institutional investors are increasingly active, as evidenced by the increasing open interest on the CME Group exchange, presently sitting at $10 billion. However, like the spot market, futures trading volumes have also decreased.