Bitcoin Long-Term Holders Face 350% Unrealized Profit Threshold

Bitcoin long-term holders are on the verge of reaching a level of unrealized profit that has historically triggered selling. This level coincides with the return of Bitcoin's price to six figures. According to onchain analytics firm Glassnode, if the price of Bitcoin continues to rise, there is a risk of a significant increase in selling from older investors. In its latest newsletter, Glassnode calculated that long-term holders (LTHs) are currently sitting on nearly 350% unrealized profits. This level is a key historical indicator that LTHs may start to sell their holdings to realize these profits.

Bitcoin's recent price surge to multimonth highs has tempted an increasing number of holders to take profits, including those known as "diamond hands" who are typically resistant to selling. Glassnode's analysis shows that the aggregate unrealized profits for LTHs are nearing 350%, a level that has historically led to increased selling pressure. The firm defines LTHs as entities holding Bitcoin for more than six months and identifies the $100,000 price zone as a critical area to watch for changes in LTH behavior. Historically, LTHs have increased their spending when the average member holds a +350% unrealized profit margin. According to Glassnode's analysis, the average LTH is expected to hit this profit margin at around $99,900, which could lead to an uptick in sell-side pressure as the market approaches this zone. This would require substantial buy-side demand to absorb the distribution and sustain upward momentum.

Despite reaching $97,500 this week, Bitcoin has not yet convinced traders that it can return to classic bull market behavior. Popular trader TheKingfisher pointed to order book liquidity as a sign that sellers may take advantage of the recovery. TheKingfisher noted a massive wall of long liquidations stacked up under $91,000 and barely any significant shorts above the current price of $96,600. This huge imbalance suggests a strong potential downside magnet and high risk for longs near current levels, indicating that the upside potential for Bitcoin looks thin for now. Glassnode also acknowledged the need to demonstrate key resistance/support flips, referencing the 111-day simple moving average (SMA) and the aggregate cost basis of Bitcoin speculators, known as short-term holders (STHs). The price has recently surged above both of these pricing models and is now attempting to consolidate within this zone, highlighting a noteworthy degree of strength behind this upward swing. However, these levels must be broken and held for further price appreciation, as a rejection of this level would push the price back into bearish territory and return many investors to a state of meaningful unrealized loss.