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- 1 Reportedly, the current Bitcoin velocity is at 15.78.
- 2 Bitcoin is poised to maintain its downward velocity until it approaches its previous all-time high.
Bitcoin (BTC) recently went through a series of achievements including a rise in trading price and profitability. The flagship cryptocurrency stands way below the all-time highs but the holders and investors are still bullish. Bitcoin velocity can prove the sentiment as it is at an all-time low.
A recent edition of cryptocurrency exchange Bitfinex’s weekly Bitcoin report, Bitfinex Alpha, noted some of the key ongoing developments in the Bitcoin market. The all-time low of Bitcoin velocity is among the crucial findings of the report.
According to the report, the current Bitcoin velocity is at 15.78. For comparison, the velocity was at 80 during the last bear phase around 2018-19.
Glassnode explains velocity as a metric to gauge the pace of how quickly units of an asset are moving in the network. It is a product of the division of on-chain transaction volume by the assets market capitalization.
The report suggests that the lower levels of BTC velocity prove that long-term holders of the leading cryptocurrency are not willing to sell their asset holdings but the buyers are seeking to buy it.
Low velocity can be seen as a positive sentiment for the leading cryptocurrency. Holders are reluctant to sell their Bitcoin. The report suggests that about 13.65 Million BTC, accounting for 70.35% of the circulating supply, remained dormant for almost a year.
Realized Profits on Bitcoin Investment Can Be Impactful
In the midst of a bullish market phase, Bitcoin is set to maintain its downward velocity until it approaches its last all-time high. The anticipation is that with the ascent of the cryptocurrency’s price, the velocity will rise, leading to a reduction in dormant BTC as long-term holders opt to convert their ‘paper gains’ into tangible profits.
Despite the majority of BTC holders experiencing positive returns, a reluctance to realize gains prevails. According to the latest Bitfinex Alpha report, a staggering 83% of the BTC supply currently sits at a profit, marking the highest percentage since November 2021 when the crypto asset soared to its record-breaking $68,000 high.
The recent surge in Bitcoin’s value to new yearly highs has thrust a significant portion of the circulating supply into a profitable state. However, the extent of holders’ unrealized profit, defined as the difference between the current and original purchase prices of BTC, is not exceptionally large.
Analyzing data from Glassnode, industry analysts reveal that 16.366 Million BTC, equivalent to 83.7% of the total circulating supply, is presently in profit. This percentage surpasses the historical average of 74% and edges closer to the upper limit of the +1 standard deviation band, currently hovering around 90%. This trend suggests that the crypto market is in a relatively robust position.
As Bitcoin’s price trajectory continues, the market is closely monitoring the behavior of long-term holders who, as the report suggests, may initiate selling activities to realize profits. The delicate balance between unrealized and realized gains is a key factor that will shape the evolving landscape of Bitcoin’s market dynamics.
In summary, the current market sentiment is characterized by positive returns for a significant majority of BTC holders, with the potential for increased velocity and a decline in dormant Bitcoin as long-term holders contemplate converting their gains into realized profits. The data reflects a market in a strong position, with the majority of the circulating Bitcoin supply currently residing in a profitable state.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
