Bitcoin Surge Keeps Supply 81% Profitable: Glassnode

Bitcoin (BTC)'s breakout to a new annual high on Monday has pushed investors' holdings back into profit, according to a new report from Glassnode.

According to the blockchain and market intelligence platform, 4.7 million BTC flipped the green after the rally, representing 24% of Bitcoin's circulating supply.

Chaos in the derivatives market

The rise in assets was coupled with a few liquidations, clearing 35,000 BTC worth of open interest from the perpetual futures market on October 23, following a similar liquidation of 25,000 BTC on October 17.

Glassnode compared the event to a similar short-squeeze in January, which took bitcoin past $20,000 for the first time in months. Broken down by geography, data from K33 Research shows that Eternal OI Shark is up 26,735 BTC on offshore exchanges, up 4,380 BTC on CME-controlled sites.

Meanwhile, the options market exploded, posting an 80 percent increase in open demand for call options at $4.3 billion. High open demand for call options is thought to indicate bearish market sentiment.

“This is a relatively new development in the structure of the Bitcoin market, where the options market now has a similar balance to futures,” Glassnode wrote.

Overcoming key price restrictions

Glassnode notes that Bitcoin's rally has taken it beyond two important “price-based” levels – assumptions about the price at which the typical investor currently buys BTC.

First, the company's fair market average price estimate currently sits at $29,780 on a retrospective basis. “This model… historically, the Bitcoin market has seen half the time trading above and half the time below this level,” Glassnode said.

Bitcoin's short-term holding price base also hit $28,000, giving the latest investor a 20% gain. Despite the findings, Glassnode said long-term investors were “surprisingly unaffected,” with their total holdings breaking to a new record high of 14.899 million BTC.

About 29.6% of this group currently holds their Bitcoin at a loss, similar to late 2015, early 2019 and the March 2020 market crash. Glassnode said this group could be “stronger” and “stronger-handed” than previous cycles.

“The market has crossed a number of key levels where overall investor psychology may be stalling, which will be important to watch over the coming weeks,” the company reported.