Bitcoin investor stress levels remained moderate despite correction from all-time highs

Bitcoin’s (BTC) latest market correction from its 2024 all-time high (ATH) of over $108,000 reflects a cooling phase but relatively low levels of investor stress indicate the bull market is far from over, according to a recent report by Glassnode. 

The report highlighted that the number of BTC held at an unrealized loss currently fluctuates between 2.0 and 3.5 million coins. This amount is well below the 4 million coins seen during the lows in mid-2024, signaling a less distressed market environment. 

For comparison, early bear markets have historically recorded between 4 and 8 million coins underwater.  

Glassnode’s data reveals that short-term holders concentrate on unrealized losses. These investors acquired Bitcoin within the past 155 days, often near the market peak.

The spot price of $94,398, registered early in the day on Jan. 15, was 9.2% above the average short-term holder cost basis of $88,400. This price places the market within the norms of a typical bull market but raises concerns about potential sell-offs if prices dip below this threshold.

The Relative Unrealized Loss metric, which compares unrealized losses to market capitalization, also stands at approximately 4.3%. The percentage is notably lower than the peaks of over 10% during crises like the 2020 COVID-19 selloff or the 2021 China mining ban.  

Evolving market conditions

The Market Value to Realized Value (MVRV) ratio, an important measure of unrealized profit in the market, currently stands at 1.32. This indicates that the average Bitcoin holder has a 32% unrealized profit. 

This metric suggests an underlying tone of positive sentiment despite the market’s pullback from euphoric highs.  

The report also noted historical analysis showing that MVRV peaks have diminished with each successive market cycle, reflecting Bitcoin’s increasing market maturity and reduced speculative intensity. 

For instance, the MVRV high reached 8.07 in 2011 but has declined to 2.78 in 2024.  

To adapt to Bitcoin’s maturing market structure, Glassnode has refined its MVRV Z-Score model, employing a one-year rolling window. This updated approach captures near-term market dynamics more effectively and identifies key market phases and turning points.  

Currently, Bitcoin is trading above the 1-year mean of $90,900 but below the upper bullish threshold of $112,600, suggesting the market remains in a bullish phase, albeit with a retreat from recent highs.

This is further cemented by the flagship crypto’s positive momentum to retest $100,000 following the US CPI data release on Jan. 15. As of press time, BTC was trading at $99,532, based on CryptoSlate data.

Furthermore, the report noted the shift in Bitcoin’s market behavior over time. Reduced volatility, increased institutional participation, and new spot demand driven by exchange-traded funds (ETFs) have contributed to a more stable market structure.  

Despite the current correction, the metrics suggest that Bitcoin’s market remains resilient, with a positive overall outlook.

However, a sustained failure to regain upward momentum could intensify pressure on short-term holders.

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