Glassnode: Has the sentiment in the crypto market completely changed? Who is making a profit?

Source: Glassnode; Translated by: Wuzhu, Golden Finance

Summary

• Due to optimistic sentiment regarding a possible easing of the US-China tariff tensions, the price of Bitcoin surged to $94,700. The price briefly recovered the cost basis for short-term holders, which is a key midpoint distinguishing between bear and bull market phases.
• The profit supply percentage has risen from 82.7% when BTC was last traded at a similar price level to 87.3%. This indicates that nearly 5% of the supply has changed hands during the recent adjustment.
• STH profit-loss ratio reached 1.0, indicating that many recent buyers are at breakeven, a level often associated with exit risk. Realized profits have also increased significantly, mainly driven by short-term investors locking in gains.
• The open interest in futures contracts increased by 15.6%. However, despite the rise in market trading, the financing rate turned negative, indicating an increase in short interest.
• On April 22, the net inflow of the US spot Bitcoin ETF reached a historic high of $1.54 billion, indicating a significant influx of institutional demand. Standardized flow data shows that through the ETF, BTC demand far exceeds ETH demand, which helps explain Ethereum's relatively poor performance.

After several weeks of low activity and lower liquidity conditions, the market has finally responded positively to broader macro catalysts. Following optimistic signals from the U.S. government regarding the reduction of tariffs on Chinese imports, both the stock and cryptocurrency markets have seen an increase.

In terms of Bitcoin, this rebound briefly broke through a key on-chain threshold: the cost basis of short-term holders (STH). This model reflects the average acquisition price of market participants who recently purchased the tokens and typically acts as a key pivot level. Historically, sustained breaks above this price model mark the transition between bearish correction periods and the resurgence of bullish sentiment.

However, very similar to the situation between July and September 2024, this move has so far only resulted in a temporary recovery of the STH cost base. This suggests that optimism is emerging, but it has not yet confirmed that the market has fully turned bullish. As more investors return to meaningful unrealized investments, continued strength above this level is likely to boost market confidence.

The market has recently risen to $94,300, and at the same time, the unrealized profits held by investors have also significantly rebounded. The profit supply percentage indicator has risen to 87.3%, a substantial rebound from the low in March.

When Bitcoin's last trading price was around $94,000, only 82.7% of the supply was profitable. This means that since early March, as the market has consolidated and moved lower, nearly 5% of the circulating supply has changed hands at lower prices.

Historically, a typical euphoric phase often follows this indicator stabilizing above 90% for a prolonged period, indicating widespread profitability and increased investor confidence.

Another indicator that Bitcoin has returned to a significant decision area is the STH supply profit and loss ratio, which has recently surged to a neutral level around 1.0. This indicates that short-term supply is more evenly distributed between profits and losses among the tokens, making the sentiment of this group more balanced.

This structure is very important. In the previous bear market, the STH-P/L ratio traded far below 1, and this level acted as a resistance ceiling. Whenever this indicator retests 1.0 from below, it is often associated with the formation of local tops, as investors begin to exit their positions and suppress momentum.

If the market can convincingly recover this level and trade above 1.0, it will be a stronger signal of recovery. Monitoring the trading situation of this ratio in the coming weeks, especially in conjunction with realized profit-taking behavior, can help assess whether the market is rebuilding a more constructive recovery from this adjustment.

Profit Taking Pressure Test

We now have a market framework at a decision point, and profit-taking behavior has become a key signal that needs to be monitored. Currently, the total realized profit from hourly solutions has surged to $139.9 million/hour, which is about 17% higher than its benchmark of $120 million/hour.

This increase indicates that many market participants are taking advantage of this rebound to lock in profits. If the market can absorb this selling pressure without collapsing, the future will look much brighter.

On the contrary, if these levels are not maintained while achieving huge profits, this move may be marked as another dead cat bounce, consistent with the relief bounces that faded under similar conditions before.

! 83cr9Fchd98HiV0uQIF54rE37lDnDegbFkpqEXzh.jpeg

Who is profiting?

In addition to the amount of realized gains, understanding which groups are realizing profits provides deeper insight into market sentiment. To do this, we used the Yield on Used Output (SOPR) – a metric that compares the sale price of a token to its original cost base, providing insight into the average profit or loss multiple locked in by investors.

The Short-Term Holders' SOPR (STH-SOPR) shows that during the recent surge, recent buyers are the main group locking in profits.

This is the first significant breakthrough of the STH-SOPR above the breakeven level of 1.0 since the end of February, and it is another relatively positive signal for investors to return to profitability. Overall, trading above 1.0 for the STH-SOPR is characteristic of a bullish upward trend.

Short Perpetual Options

Although some spot holders seem to be locking in profits, perpetual swap traders tend to short during the rebounds. The open interest of perpetual swap contracts has significantly risen to 281k BTC, up about 15.6% since the low of 243k BTC set in early March.

This reflects the increase in leverage in the derivatives market, which often exacerbates market volatility if prices begin to touch traders' stop-loss or liquidation zones.

Interestingly, the surge in open interest coincides with a drop in the average financing rate, which plummeted to -0.023%. This suggests that the inclination towards short positions is increasing, indicating that many traders are betting on a rebound, possibly believing that the recent trend is overdone.

If the upward momentum continues, the divergence between the increase in open interest and negative capital inflow will lay the foundation for a potential short squeeze situation.

However, when narrowing the scope to assess the long-term sentiment of perpetual swap traders, the situation becomes more cautious. The 7-day moving average of long positions' hourly funding rate has been steadily declining, currently at $88,000 per hour, and is still on a downward trend.

This indicator serves as a measure of the willingness for sustained long exposure, reflecting the dollar value that traders are willing to pay based on market "consensus." The current downward trend in premiums indicates that most positions are indeed shifting towards short positions, creating an incentive for market makers to take long positions to earn financing rate interest.

Institutional Interests

**ETF flows have become an important indicator of institutional investor sentiment and demand this cycle. **Tracking the inflows and outflows of ETF products provides a unique perspective on the beliefs and engagement of large capital allocators.

During the recent rise of Bitcoin to $94,000, the net inflow of the U.S. spot Bitcoin ETF reached an astonishing $1.54 billion in a single day, marking one of the highest net inflows since its inception. This influx sends a strong signal indicating that demand for Bitcoin may be starting to recover.

Is it still Bitcoin season?

Despite the strong rebound in Bitcoin prices, many are questioning why Ethereum has not experienced a similar magnitude of rebound. One answer lies in the comparison of ETF flows, which we normalize and adjust based on the relative spot trading volumes of each asset.

In the past two weeks, Bitcoin ETFs have seen two significant waves of inflows, each exceeding 10% of BTC's spot trading volume, highlighting a relatively strong institutional demand situation.

In contrast, the inflow of Ethereum ETFs remains quite sluggish, with inflows accounting for less than 1% of ETH's spot trading volume. This stark difference highlights the disparity in institutional demand between the two assets, which may be one reason why ETH has continued to lag behind BTC in recent performance.

! 64S5MUYxQHaSdDNAwcslu7L9MKG9kznNrGbtcoPz.jpeg

Conclusion

The price of Bitcoin has rebounded to over $94,000, reflecting a shift in macro optimism and investor sentiment. Positive signals around Sino-U.S. tariffs triggered the rebound, recovering the cost basis for short-term holders and raising the profit supply percentage to 87.3%. Several indicators suggest that Bitcoin is experiencing a positive recovery, while signs of a short squeeze have also appeared in the futures market.

Institutional demand for Bitcoin may be returning, with a single-day net inflow of $1.54 billion into Bitcoin ETFs. The market is at a decision point, and the key level to watch is the cost basis of short-term holders, which typically outlines the bullish and bearish market structure. Bulls need to drive the market to break through this price model and hold above this level.