Bitcoin investors exercise caution as speculative interest diminishes

Bitcoin investors are displaying a diminished interest in speculative activities as a state of balance emerges in on-chain operations and perpetual futures markets, according to a recent report by Glassnode. The report noted a decrease in profit and loss-taking actions, with perpetuals funding rates returning to neutral levels, indicating a significant decline in speculative enthusiasm among market participants across various instruments and cryptocurrencies.

Moreover, the report highlighted a noticeable reduction in liquidation volumes in perpetual contracts compared to the excitement seen around the March all-time high, reinforcing the idea of reduced speculative appetite and suggesting a market regime more focused on spot trading. Glassnode also observed a slowdown in net capital inflows into Bitcoin in recent months, signaling an equilibrium between investors taking profits and those realizing losses.

The report revealed that the net realized profit/loss currently stands at over $15 million per day, a stark contrast to the $3.6 billion per day capital inflow during the market’s $73,000 all-time high in March. Additionally, the MVRV Ratio, a metric used to assess investors’ average unrealized profit, has tested its historical average value of 1.72 over the past two weeks, historically marking a transition point between macro bull and bear market trends.

Following the all-time high, a portion of short-term investors transitioned into long-term investors as their confidence was tested by the sideways price movement post-peak. Long-term holders, defined as addresses holding Bitcoin for over 155 days, decided to hold onto their assets, resulting in a portion of the Bitcoin supply remaining stagnant for three to six months.

The report highlighted that coins aged 3 to 6 months now make up over 12.5% of the circulating supply, resembling the structure seen during the mid-2021 sell-off and the height of the 2018 bear market. Glassnode concludes that these indicators indicate a reset in speculative interest across the entire crypto market, with spot markets likely to be the primary driver of price action in the near future.