Bitcoin's recent drop back below $10k has caused some concern for long-term HODLers and investors.
However, on-chain metrics such as Unrealized Profit suggest that BTC has more room to grow before any meaningful downward correction takes place.
What is Unrealized Profit?
Unrealized Profit is defined as the total profit (in USD) of all coins whose price at realization time was lower than the current price (normalised by the market cap). In other words, it represents the total profit accrued by UTXOs which were created when the price of the asset was lower than the current price.
This metric is part of the profit/loss family of metrics, which serve to answer the question: If all bitcoins were sold today, how much would investors stand to gain or lose?
What does this mean for the market?
Currently, Unrealized Profit is at a value similar to historical levels seen at the beginning of bull markets. Its relatively low current level supports the interpretation that the price of bitcoin has more room to grow before investors start realizing their profits en masse.
Another way of looking at this is that investors have more to gain by waiting for a price increase than they do by realizing profits now.
If you were worried about the downturn of late February, rest assured that on-chain fundamentals for BTC are still healthy.
- Follow us and reach out on Twitter
- For on–chain metrics and activity graphs, visit Glassnode Studio
- For automated alerts on core on–chain metrics and activity on exchanges, visit our Glassnode Alerts Twitter
Disclaimer: This report does not provide any investment advice. All data is provided for information purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.