Bitcoin NUPL Metric Indicates Short-Term Holders’ Dilemma: Data

Bitcoin short-term holders’ supply has taken a severe hit this year, while the asset itself wiped all the gains of ‘Uptober’ following several corrections and a failure to launch a meaningful rally.

But as the price of Bitcoin recovers, the STH NUPL metric approaching equilibrium could spell trouble for the market, putting the asset at the risk of facing increased sell pressure from this cohort of investors in the near term.

Bitcoin Short-Term Holders May Exert Selling Pressure

When the values for the Net Unrealized Profit Loss (NUPL) metric for short-term holders (STH) are above 0, these holders can realize a profit by selling their coins. Such a scenario depicts that the current market price is higher than the average price at which the STH cohort acquired their assets.

Conversely, when the STH NUPL values are below 0, short-term holders may incur losses if they sell their coins, essentially signaling that the current market price is lower than the average acquisition price for this cohort. At the moment, the STH cohort is in unrealized losses.

CryptoQuant analyst noted that the Net Unrealized Profit Loss (NUPL) metric for short-term holders (STH) is approaching zero, with current values at -0.024. This statistic suggests that the average acquisition price of assets by the STH cohort is reaching parity with the current market price.

It also indicates the absence of significant unrealized profits or losses for this group of market participants. As such, the rising Bitcoin price, coupled with the increase in the STH NUPL metric, could potentially start exerting selling pressure on the market.

The crypto analytic platform further revealed that this level will play a pivotal role in the market, as many participants will be inclined to capitalize on their investment instead of HODling.

“When the STH NUPL approaches zero, it may indicate a “balanced” market state for short-term holders. Unrealized profits or losses become minimal, and the average acquisition price of assets for this cohort becomes equivalent to the current market price.”

Short-Term Holders Are Underwater

Bitcoin short-term holders are those who plan to own the asset for the shortest amounts of time and are typically sensitive to abrupt price actions. This cohort of investors is largely underwater following the recent drawdowns and is potentially suppressing uptrends as well.

In another interesting shift in investor dynamics, short-term Bitcoin holders have reduced their stash by nearly one million BTC since April this year. On the other hand, long-term Bitcoin holders have added more than one million BTC during the same period. As a result, STH supply has plunged to levels not seen in nearly eight years, while LTH supply now stands at an all-time high.