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The Long-Term Holder Supply is the bread and butter of Bitcoin on-chain analysis as it is a perfect way to determine the current market cycle. As for now, LTH profitability is under extreme bear market stress, according to a Glassnode analyst.
The Long-Term Holder Supply in Loss is currently around historical highs as only 4% of all trading history has shown greater BTC-denominated losses. Such a high percentage of the long-term supply in loss suggests the market is in a deep bear market and will only reverse when the percentage of supply in loss decreases.
#Bitcoin Long-Term Holder Supply in Loss remains near historical cycle highs, with only 193 out of 4421 trading days (4.4%) closing with greater BTC denominated losses.— glassnode (@glassnode) August 24, 2022
This suggests LTH profitability is under extreme bear market stress.
Live Chart: https://t.co/gkAvOCdR1T pic.twitter.com/dULaKhjUQ8
Whenever investors' position is at a large loss, the market becomes more anemic as the buying power correlates with the profitability of market participants. With the highest level of profitability on BTC, we saw a spike from around $40,000 to almost $70,000.
Bitcoin is struggling on market
With the positive dynamic on the U.S. dollar, risk assets like cryptocurrencies are facing relatively high selling pressure as investors move their funds toward safer options or are "tethering out."
An additional source of pressure on digital gold came from increasing outflows from the cryptocurrency market. Despite the most recent success of BTC, Ethereum and other digital currencies, institutional investors are still moving their funds away from crypto.
Ethereum's Merge update date initiated a short-term rally on the market with BTC reaching $25,000, Ethereum aiming at $2,000 and cryptocurrencies in general gaining around 20% to their values.
Unfortunately, with the lack of inflows and a fundamental change in the monetary policy of the U.S., the market's sentiment remains the same.