Bitcoin Profit Cycle Turns Negative for First Time Since 2023: CryptoQuant

According to the latest analysis from blockchain intelligence firm CryptoQuant, Bitcoin has experienced a significant shift in its profit cycle, with key metrics indicating that short-term holders (STHs) are now selling their holdings at a net loss. This marks the first time that the aggregate realized profit cycle for STHs has dipped into negative territory since the early stages of 2023, preceding the major accumulation phase that fueled the subsequent bull market.

CryptoQuant highlights that metrics tracking the realized profit/loss of coins moved on-chain show that the average acquisition cost of coins sold by STHs (defined as those holding for less than 155 days) is currently higher than the realized price, resulting in a net negative profit realization. This dynamic indicates market capitulation among recent investors, where price weakness is forcing newer participants to exit positions at a loss.

The negative turn of the STH profit cycle is often viewed by analysts as a necessary ‘cleansing’ mechanism, removing speculative excess from the market. While this typically correlates with increased volatility and potential price consolidation, historical data suggests that periods where short-term holders realize losses often set the stage for market stabilization and eventual recovery, as supply shifts from weaker hands to robust, long-term holders. Analysts are watching closely to see how quickly this selling pressure is absorbed before anticipating the next major upward movement.

Source: Bitcoin Profit Cycle Turns Negative for First Time Since 2023: CryptoQuant