Bitcoin (BTC)’s explosion to a new yearly high on Monday has placed the vast majority of investors’ holdings back into profit, according to a new report from Glassnode.
The blockchain and market intelligence platform said that 4.7 million BTC flipped green after the rally, representing 24% of Bitcoin’s circulating supply.
Chaos In The Derivatives Market
The asset’s rise was coupled with a slew of short liquidations clearing 35,000 BTC worth of open-interest from the perpetual futures market on October 23, after a similar 25,000 BTC liquidation 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 showed that perpetual OI shark by 26,735 BTC on offshore exchanges, while it rose by 4,380 BTC in CME-regulated venues.
Meanwhile, the options market has exploded, with open interest in call options registering an 80% rise by $4.3 billion. High open interest in call options is thought to indicate bullish market sentiment.
“This is a relatively new development in Bitcoin market structure, where options markets are now of a comparable scale to futures,” wrote Glassnode.
Passing Key Price Thresholds
Glassnode noted that Bitcoin’s rally took it above two important “cost-basis” levels – estimates surrounding the price at which the typical investor bought their current BTC.
Firstly, the firm’s True Market Mean Price estimate currently sits in the rear-view at $29,780. “This model…has historically, seen the Bitcoin market trade half its time above, and half below this level,” Glassnode said.
Bitcoin’s Short Term-Holder cost basis was also overcome at $28,000, putting the average recent investor into 20% profit. Despite the gains, Glassnode said that long-term investors were “impressively unaffected,” with their aggregate holdings breaking to a new all-time high of 14.899 million BTC.
About 29.6% of this cohort currently holds their Bitcoin at a loss, similar to late 2015, early 2019, and the March 2020 market crash. Glassnode said this cohort may be more “hardened” and “firm-handed” than in previous cycles.
“The market has crossed over several key levels where aggregate investor psychology is likely to be anchored, making the weeks that follow important to keep an eye on,” concluded the firm.
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