Bitcoin Sell-Side Pressure Drops to Historic Lows Amid Rebound
Bitcoin's sell-side pressure has fallen sharply in September, with long-term holders and recent buyers showing less appetite to take profits even as the cryptocurrency remains below its recent highs. This development is significant, as it suggests a potential accumulation phase or a broader market bottom. In a recent report, crypto analytics firm Glassnode said Bitcoin's sell-side risk ratio (SSRR) fell to 7 this week from 16 in September, putting the measure among its lowest readings on record.
What is the Sell-Side Risk Ratio (SSRR)?
The SSRR tracks realized profits and losses on-chain relative to Bitcoin's realized market capitalization. Lower readings typically point to periods of reduced selling activity. This metric reached 16 as Bitcoin climbed above $80,000 in late August, but the rally did not trigger a major wave of coins moving back into the market. Glassnode said the August rebound "drew little supply," with long-term holders accounting for a much smaller share of realized profits in September.
Long-Term Holders' Share of Realized Profits Falls
According to Glassnode, long-term holders' share of realized profits fell to 47% in September from 88% at the August peak. This indicates that recent buyers are less likely to take profits, which could be a positive sign for the market. Glassnode also noted that a sustained move back above 16 basis points would say the August-sized sellers have returned; until then, the spot market is short of sellers at these prices.
ETF Investors Remain Underwater
Meanwhile, ETF investors remain underwater. Glassnode estimates that US spot Bitcoin exchange-traded fund buyers would return to aggregate breakeven around $86,000. Bitcoin has closed below that level for 229 sessions, leaving the cohort with roughly $3.9 billion in paper losses. This highlights the ongoing challenges faced by investors in the cryptocurrency market.
Rebound in the Crypto Market
The crypto market rebounded on Wednesday, with Bitcoin recovering toward $80,000 after falling to about $77,600 in the previous session. Ethereum (CRYPTO: $ETH) held around $2,500, while XRP (CRYPTO: $XRP), Solana (CRYPTO: $SOL), BNB (CRYPTO: $BNB), Dogecoin (CRYPTO: $DOGE) and Cardano (CRYPTO: $ADA) also gained.
Challenges Ahead
However, the recovery faces a difficult macroeconomic backdrop. Strong US labor data has increased expectations of another Federal Reserve rate hike, while Brent crude has climbed above $100 a barrel amid rising Middle East tensions, raising fresh inflation concerns. Simon-Peter Massabni, head of business development at XS.com, noted that the recovery will be challenging in this environment.
What to Watch Next
As the market continues to navigate this challenging environment, investors will be watching for signs of sustained momentum. A sustained move back above 16 basis points in the SSRR could indicate a return of August-sized sellers, while a continued decline in the SSRR could suggest a potential accumulation phase or a broader market bottom. The market will also be watching for any changes in the macroeconomic backdrop, including the impact of potential Federal Reserve rate hikes and inflation concerns.