According to a Glassnode report, Bitcoin has entered a highly profitable “euphoria phase.” Historically, such phases have seen corrections approximately 22 days after they begin. The current phase has already lasted 12 days, suggesting that the risk of a pullback may materialize within the next 10 days. Additionally, realized profits in November have reached $20.4 billion. If this exceeds the historical peak of $30 billion, it could trigger selling pressure.
(Previous context: Not the top yet? Glassnode: Bitcoin’s profit-taking momentum is lower than the last peak, leaving room for further gains)
(Background supplement: Inflation under control > Bitcoin breaks above $93,000 and then “plunges by $5,000,” leading to over 250,000 liquidations)
Yesterday (13th), the US released CPI data in line with expectations, adding momentum to the cryptocurrency market. Bitcoin surged to as high as $93,477.11, gaining over $7,000 within the day, but subsequently fell by more than $5,000, resulting in over 250,000 liquidations. Investors remain vigilant about potential corrections in the cryptocurrency market.
On December 12th, the latest report from Glassnode provided clues about the timing of a possible correction. The report noted that Bitcoin has entered a new price discovery phase following a new high, with all circulating supply in a profitable state. Historically, such “euphoria” phases have lasted around 22 days before a market correction, which causes more than 5% of the supply to fall back below the original purchase price.
The current rally has maintained this highly profitable state for 12 days, highlighting strong market sentiment. However, based on past trends, it also suggests that the market may be approaching a correction period.
The chart below shows the percentage of supply in profit (blue line) and the number of consecutive days each month when more than 95% of the supply is in profit (yellow), providing a reference for the timing of market adjustments.
Additionally, Glassnode has tallied the cumulative realized profits during this phase to reflect the scale of market gains. The report noted that historically, monthly realized profits in this phase range from $30 billion to $50 billion. As of mid-November, the market has already realized $20.4 billion in profits, although still below the historical peak, indicating a significant scale of gains.
If Bitcoin prices continue to rise, the realized profit for November is expected to exceed $30 billion, approaching historical highs. Therefore, monitoring changes in this data can help determine whether a market correction is imminent.
Glassnode uses the short-term holder cost bands shown in the chart below to predict at what levels Bitcoin prices might encounter strong profit-taking scenarios.
Glassnode explained that during the all-time high (ATH) discovery phase, Bitcoin prices typically approach and test the upper limit (red line in the chart) multiple times. This is because new investors enter at higher prices, driving strong demand momentum that pushes prices up. However, if the influx of new capital is insufficient to offset early investors’ profit-taking, prices may correct.
Currently, Bitcoin’s upper band is set at $94,900. By observing the distance between the price and these band intervals, especially the upper and middle bands, one can identify the timing when Bitcoin’s gains may slow down and selling pressure may increase.
For further reading: Overheating signal? Robinhood, Coinbase dominate US App Store finance rankings, Google Bitcoin search interest reaches peak
