Bitcoin has surged to a new all-time high of $122,000, signaling strong bullish momentum and renewed investor confidence. While this rally is exciting, a deep dive into on-chain data reveals that short-term holders are now sitting on significant unrealized profits, pushing several key metrics into “overheated” territory. This suggests a critical juncture where sustained demand is vital to absorb potential profit-taking.
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Bitcoin’s Bullish Momentum: Clearing Key Accumulation Zones
After a period of consolidation, Bitcoin has decisively broken through previous resistance levels, reaching a new all-time high of $122,000. This breakthrough is particularly significant because the price moved above two key accumulation zones, specifically between $93,000-$97,000 and $104,000-$110,000. These areas previously saw heavy buying activity, and overcoming them now establishes strong support, providing a potential foundation for future market pullbacks. This upward movement reinforces the market’s bullish sentiment, indicating a strong conviction among buyers.
Bitcoin Cost Basis Distribution Heatmap showing strong accumulation zones around k-k and 4k-0k, indicating solid market support after breaking new highs.
Entering Price Discovery: Are Investors Getting Too Comfortable?
As Bitcoin enters this new phase of “price discovery”—meaning there’s no historical resistance above its current price—the vast majority of the circulating supply is now held at a profit. On-chain analysis shows that the current spot price of Bitcoin is now above the 95th percentile of the Cost Basis Distribution Quantiles, a level previously noted around $107,400. Historically, reaching this threshold often triggers increased profit-taking by a growing number of holders. This activity can lead to a redistribution of Bitcoin to new investors at higher prices, potentially creating a market structure where many investors hold Bitcoin with an elevated cost basis, making the overall investor base more sensitive to price fluctuations.
Bitcoin Cost Basis Distribution Quantiles chart showing the spot price above the 95th percentile, a historical indicator of potential market top formation and increased profit realization.
Short-Term Holders: Signs of Overheating and Profit-Taking
Following its peak at $122,600, Bitcoin experienced a slight pullback to $115,900. This reaction aligns with an expected increase in sell-side pressure as investors capitalize on market strength.
The Short-Term Holder Profit Picture
The recent rally saw Bitcoin briefly exceed $120,000, which corresponds to a +1 standard deviation move above the Short-Term Holder (STH) cost basis. This level has historically acted as a resistance point, especially during periods of high speculation. Should the current momentum continue, the next significant resistance could be around the +2 standard deviation band, currently sitting at approximately $136,000.
Bitcoin Short-Term Holder (STH) Cost Basis Model chart showing price briefly exceeding the +1 standard deviation band, signaling near-term overheated conditions for Bitcoin.
Looking at the “Percent of Short-Term Holder Supply in Profit,” we find that 95% of Bitcoin held by recent investors is now in profit. This figure is more than one standard deviation above its long-term average of 88%, strongly indicating a market in an increasingly euphoric state. This is the third time this metric has surpassed this threshold since early May 2025, reinforcing the idea of high optimism. Investors should monitor if this metric stabilizes or dips below 88%, which could signal a weakening in demand.
Chart illustrating the Percent of Short-Term Holder Supply in Profit for Bitcoin, currently at 95%, indicating a euphoric market state for recent investors.
To further assess the extent of these unrealized profits, the “Short-Term Holder Relative Unrealized Profit” metric recently touched an “overheated” threshold of 15.4% (+1 standard deviation above the mean) before settling back to 13.6%. This zone typically marks the beginning of top formation processes, which often unfold gradually as short-term holders take profits. Given their tendency to react quickly to price changes, this metric is crucial for detecting early signs of demand exhaustion.
Bitcoin Short-Term Holder Relative Unrealized Profit indicator touching the overheated threshold, suggesting the start of a potential market top formation phase as investors hold significant paper gains.
Waves of Profit Realization
With unrealized profits reaching high levels, it’s reasonable to expect short-term holders to accelerate their profit-taking. We can identify these events by observing the “Percent of Spent Volume in Profit by Short-Term Holders” rising above the 1 standard deviation band. This pattern has historically preceded periods of demand-side exhaustion. The market has just witnessed its first major wave of high-volume profit-taking since late 2024, indicating that initial selling pressure is emerging.
Chart depicting the Percent of Spent Volume in Profit by Bitcoin Short-Term Holders, showing a significant rise above the 1 standard deviation band, indicating the first major wave of profit-taking since late 2024.
Complementing this, the “Realized Profit to Loss Ratio” provides insight into the intensity of realized gains. This metric recently spiked dramatically to 39.8, far exceeding the +2 standard deviation threshold, before moderating to 7.3. While still elevated, this pullback suggests the most intense phase of profit-taking has eased for now. Historically, repeated spikes into this “overheated zone” signal extreme profit-taking that can eventually overwhelm new demand, leading to market corrections.
Bitcoin Realized Profit to Loss Ratio chart showing a sharp spike to 39.8, well above the +2 standard deviation threshold, indicating intense profit-taking activity by investors.
Conclusion
Bitcoin’s ascent to new all-time highs and its successful breach of significant accumulation zones underscore robust market momentum. However, a closer look at the behavior of short-term holders reveals that their unrealized profits are reaching elevated levels, increasing the likelihood of further profit-taking.
So far, we’ve observed the first significant wave of profit realization since late 2024, as indicated by metrics like the Percent of Spent Volume in Profit and the Realized Profit to Loss Ratio. Historically, major market tops tend to form after multiple, sustained waves of profit-taking. This suggests that while signs of overheating are present, there may still be room for Bitcoin to push higher, potentially towards the ~$130,000 mark (the +2 standard deviation level above the short-term holder cost basis). Investors should remain vigilant, as demand-side stress indicates that increased caution is warranted in the near term.
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Disclaimer: This report does not provide any investment advice. All data is provided for informational and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.
Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies.
