The price chart of BTC at the 6M and 1Y blasts cryptocurrency winter. In November 2021, it commanded $68K. Since the middle of June 2022, yet, its range is bound around the level of $20K. But now, only over half of holders have a net unrealized profit. The BTC price abruptly rallied last week. The PoW king posted a two-digit percentage gain at the surge’s height. It kept moving up from then. After it recovered more than the level of $20,000, the price action of BTC flushed out $160 million worth of BTC shorts. If you're interested in trading bitcoins, go to https://bitql.app/.
Yet even before such a rally, almost 50 percent of Bitcoin holders were in unrealized gain or positive territory. It is as per an on-chain metric. It is called NUPL or Net Unrealized Profit or Loss.
Everything unique about Bitcoin halving
One of the most important events on the blockchain of Bitcoin is the halving. It is called halving when new Bitcoins’ supply is cut in half. Every halving lowers the inflation rate. Thus it creates upward pressure on the price of Bitcoin.
As of this year, miners of Bitcoin have been awarded 6.25 BTC for every block they mined successfully. The next halving will occur in 2024, when the block reward will fall to nearly 3.125. With time, this impact of every halving will diminish the reward of block approaches zero.
If any individual, government, or group is relied on to set up the money supply, they need to be trusted not to mess up with it. There is nobody in control or to trust. As an individual or group does not control BTC, there need to be strict rules regarding how much BTC is created and released.
By writing an overall supply and halving event into the BTC code, BTC’s monetary system is set essentially in stone. It is practically not possible to change. This means BTC is a type of hard money similar to gold, whose supply is practically no potential to change.
BTC miners invest money in specialized mining hardware and the electricity needed for running their rigs. Their rewards of mining offset this cost. But few things happen when such rewards are halved. As the halving lowers rewards, the incentive for miners for working on the network of BTC is too lowered. It leads to fewer miners and, thus, less security on this network.
So once the last BTC is mined, miners will get rewards as transaction fees to maintain the network.
BTC held at one unrealized profit
Unrealized means this metric is only for those who did not sell. It measures whether they will gain or lose if they sell at the present average market price.
Just before the sudden BTC price surge last week, almost 47 percent or nearly half of BTC holders had a profit on their hands. It was as per some estimates. By now, the number is higher.
Another estimate pegs that percentage at a much tighter margin, with the NUPL at almost -0.07. It describes if BTC holders have any profit or loss on their hands. When this number is positive, more investors will hold unrealized profits. When it is negative more will hold unrealized losses.
With this number close enough to zero, the percentage of BTC held at a profit is almost equal to that held at a loss if the holder wished to sell on the day the metric was taken.
Conclusion
The number of 7-day BTC addresses holding at a loss strongly deviating up to uniformity with profitably held token over August’s end. Long-term BTC holders are hanging onto their Bitcoin and moving it off liquid exchanges for keeping in storage. A SAXO Markets report mentioned a few things at the start of the month.
In August, BTC exchanges experienced a net withdrawal. Almost 9 percent of the overall supply is left on exchanges now in comparison to 12 percent at the start of 2022. A lower exchange balance is generally linked with a fall in potential selling pressure. In March, BTC price was in solid capitulation over November-January prices. It faced excellent resistance. Only 40 percent of holders were seen to be underwater. So research well and then make a proper decision. Millions of investors use it.