Glassnode: Profit Ratio Plummets to 38%, BTC Leverage Fully Cleared, Heavy Short Liquidations Cluster Above $87K

Original Author: Glassnode Research Team

Original Compilation: TechFlow

TechFlow Introduction: Over the past week, the crypto asset market has endured a double whammy of severe shocks: first, Binance disclosed a historic security breach involving up to $6.3 billion in stolen funds; then, the 2026 U.S. midterm elections concluded with Democrats unexpectedly sweeping both chambers of Congress, reshaping the political landscape. Yet Bitcoin's spot price, after experiencing a technical correction of roughly 10% from its September high, demonstrated remarkable downside absorption resilience, showing extremely strong bid support around the core support hub of $76,000 to $78,000.

This issue of Glassnode's flagship on-chain weekly report provides a highly detailed data deconstruction of current spot supply distribution and derivatives long/short positioning. On-chain data shows that the proportion of supply in profit rapidly cooled from an extreme greed level of 97.5% in early October down to 38%, meaning that the large volume of unrealized gains among short-term speculative positions has been thoroughly washed out; excessive long leverage in futures contracts has been forcibly flushed out, while short liquidation positions clustering near $87,000 above are accelerating; the options market, meanwhile, has displayed an asymmetric structure after the midterm elections in which far-dated call options significantly overwhelm put options. Although off-exchange incremental capital flows through U.S. spot ETF channels have temporarily taken a wait-and-see stance, Bitcoin's daily win rate against the S&P 500 has returned to the 50% equilibrium line, indicating that the broader crypto market is building a platform for the next phase of accumulation on a more solid risk-reward foundation.

Key Summary

The proportion of short-term holder supply in profit has plummeted from nearly universal profitability in early October to approximately 38% currently. This deep decline in a key metric means the current market's valuation stretch is far below the highs reached in September, and overall market froth has been significantly digested.

Bitcoin's price is currently making a precise retest of the key technical levels that were reclaimed on high volume in August, with the True Market Mean for active investors currently at $77,700 and the Short-Term Holder Cost Basis at around $75,700.

This price correction has almost completely washed out the large volume of highly leveraged long positions that accumulated since the August breakout; meanwhile, open short positions above the market are expanding against the trend, with the largest short liquidation cluster densely piled up near the $87,000 threshold.

In the options derivatives market, call option open interest significantly exceeds that of put options, with the largest single call option position expiring at the end of December concentrated in the high strike range of $80,000 to $120,000.

Spot trading volume remains firmly at roughly 1.5 times the baseline level prior to the August rally, but over the past two statistical weeks, U.S. spot Bitcoin ETFs recorded nearly $1 billion in net outflows overall.

Over the past two months, Bitcoin has demonstrated strong relative resilience against traditional major stock markets, winning half of trading days in daily comparisons with the S&P 500 — the first return to the 50% win-rate equilibrium line since March 2025.

In the face of the crypto industry's costliest theft on record at $6.3 billion, the broader market experienced only a minor drawdown of approximately 3%, demonstrating extremely strong liquidity absorption resilience.

The U.S. midterm elections concluded with Democrats securing control of both the Senate and the House. Looking back at three previous midterm elections in history, Bitcoin typically experienced one more dip within weeks after voting day before forming its cyclical macro bottom; however, this cycle's correction was largely priced in before voting day, and prices have instead edged slightly higher since election day.

In the altcoin market, short-term holders have swung from profit to loss across the vast majority of tokens, a dramatic flush-out compared to the approximately 80% of tokens in profit in late September.

Chart: Overview of key metrics across dimensions of Glassnode's on-chain macro compass

A Healthier Supply Reset

As recently as early October, Bitcoin supply held by short-term holders (defined as on-chain addresses that purchased within the past 155 days) was almost 100% in unrealized profit. At the time, the "STH Supply in Profit" ratio climbed to and firmly held above 97.5% — an extreme zone we have consistently flagged in prior research as a highly risky "sell warning line," because it meant nearly every recent buyer was sitting on substantial unrealized gains ready to be cashed out at any moment.

Following the roughly 10% corrective pullback from the September high, this metric has now cliff-dropped to around 38%, meaning the vast majority of short-term holder supply is now underwater on paper. Compared to the extreme tension a month ago, the market's restless speculative sentiment has been significantly cooled and reset. If, in the future, this metric can recover above the 50% neutral equilibrium line while spot prices hold steady, it would clearly signal that a new wave of buyers has returned to profit and re-established confidence in holding positions.

Chart: STH Supply in Profit falls back to the 38% historically healthy flush-out zone

Retesting the Breakout Level

During the oscillating uptrend from August to September, Bitcoin strongly reclaimed a series of key moving averages and cost bases that had been lost after hitting all-time highs in 2025. These key metrics include the 200-day moving average, the Short-Term Holder Cost Basis (representing the average purchase cost of recent buyers), and the "True Market Mean" (reflecting the average holding cost of all active investors network-wide).

In our previous on-chain analysis, we explicitly noted that during the two deep dips throughout October, price found precise support above the True Market Mean. On November 3, the spot closing price briefly dipped below this level (currently at $77,700), touching an overnight low of $76,100, but bulls quickly stepped in to push it back above the average.

Chart: Bitcoin price retests the active investor True Market Mean and 200-day line key support band

After a successful high-volume breakout, this kind of deep downward retest is an extremely standard and healthy pattern: those key resistance levels that took months to reclaim are now converting from resistance into support foundations below. The STH Cost Basis at $75,700 and the 50-week moving average are currently sitting just below spot price, providing multiple layers of technical buffer. As long as Bitcoin can firmly hold above these core moving averages, the solid uptrend structure built since August remains intact.

Short Liquidations Densely Accumulating Above

The Liquidation Heatmap accurately models the capital magnitude of highly leveraged futures contract positions that would be passively liquidated at various price levels. The corrective pullback from the September high has already crushed and swept through the large volume of long liquidation positions that had densely built up below the market since August, fundamentally and significantly reducing the systemic risk of cascading liquidation-driven sell-offs.

The remaining effective liquidation bands below spot price are mainly concentrated in the $73,000 to $76,000 range, which forms a powerful confluence of support together with the STH Cost Basis floor and the 200-day moving average; in the deeper zone below, only a larger liquidation gap remains from the August unilateral breakout in the $60,000 to $63,000 range.

Chart: Network-wide Bitcoin perpetual contract liquidation heatmap showing long/short position distribution

In sharp contrast to the massive deleveraging of long positions: short liquidation positions above the market have been rapidly expanding over the past week, even though Bitcoin's spot price actually only fell about 3.5% during this period. This notable data divergence indicates that many derivatives traders have been aggressively chasing shorts as prices continued to decline. The largest short liquidation cluster above the market is densely concentrated near $87,000, highly overlapping with the September swing high. Once spot buying pushes prices into a rebound, these accumulated short positions will be forced to stop out and buy back, potentially providing ample short-squeeze fuel for a price assault on that resistance level.

Options Market Leans Bullish

In the options market, the next two largest open interest expiry dates are November 27 and December 25, carrying total open interest values of $5.7 billion and $12.5 billion respectively. The max pain prices for these two key expiries (the strike price at which the largest proportion of options expire worthless) are at $80,000 and $76,000 respectively, sitting on either side of the current spot price — meaning that purely from an options max pain perspective, the market currently does not have a unilateral magnetic pull in either direction.

Chart: Distribution matrix of long/short open interest across major options strike prices through year-end

Looking across the full options landscape across all expiries, traders network-wide currently hold approximately $18 billion in total call options, significantly exceeding approximately $13 billion in put options. In the most critical end-of-December expiry, the largest call positions are densely clustered at the very high strike prices of $80,000, $90,000, $100,000, and $120,000; the corresponding protective puts are mostly deposited at low levels of $60,000 and below, primarily serving as tail-risk hedges against extreme black swan events. This asymmetric positioning clearly points to institutional traders' strategic layout for a structurally bullish market through year-end.

Trading Volume Remains Solid

Spot trading and ETF turnover volume surged when the technical breakout occurred in August, and has maintained relatively firm activity throughout September and October. Over the past two weeks, network-wide average daily spot trading volume has stabilized at approximately $24 billion, a full 50% higher than before the August breakout rally.

Chart: Network-wide Bitcoin spot trading volume and ETF average daily turnover trend

Admittedly, if measured against the frenzy when spot Bitcoin ETFs first received approval and listed earlier this year, current overall trading volume remains in a relatively moderate central range. Even so, the fact that average daily volume can still hold at 1.5 times pre-breakout levels after a significant correction fully demonstrates that the spot market's trading depth remains solid — far from being in a liquidity vacuum with no absorption capacity.

Spot ETF Flows Take a Wait-and-See Stance

Notably, however, among the currently elevated spot volumes, the contribution from U.S. spot Bitcoin ETF channels is extremely limited. Over the past two statistical weeks, U.S. spot ETFs recorded nearly $1 billion in net outflows overall, averaging about $115 million in daily net outflows. Since prices reclaimed $85,000 in mid-September, net inflow momentum through ETF channels has shown visible fatigue and stagnation.

Chart: U.S. spot Bitcoin ETFs continue recent net outflow trend

Our in-depth characterization of this phenomenon is: current market absorption and trading turnover are primarily driven by internal存量 capital within the crypto industry — more a structural repositioning and hedging of existing capital across different assets or derivatives accounts — while traditional external institutional incremental capital from outside the crypto-native circle is currently choosing to patiently wait on the sidelines due to uncertainties surrounding macro politics and the elections.

Outperforming U.S. Equity Benchmarks

Broadening the view to macro asset performance over the past two months, Bitcoin has cumulatively declined about 2%. This correction is roughly in line with the S&P 500's less than 1% decline over the same period, but notably stronger than major European indices such as the pan-European Stoxx, and significantly outperformed spot gold, which plunged about 9% over the same period. Although Bitcoin briefly led traditional stock indices by a wide margin in early October and gave back all excess gains during the subsequent correction, it did not fall behind the broader macro risk asset tempo throughout the drawdown.

Chart: Bitcoin performance comparison against S&P 500, gold, and major global assets

Returning to Parity with the S&P 500

Over the past 90-trading-day statistical period, Bitcoin outperformed the S&P 500 on exactly half of those trading days, and also showed a slight lead in average daily returns. This marks the first time since March 2025 that Bitcoin's daily win rate against traditional U.S. equity assets has returned above the 50% dividing line.

Chart: Bitcoin's rolling 90-day trading win rate against the S&P 500

The daily win rate returning to a 50-50 equilibrium formally declares the phased end of Bitcoin's passive underperformance against U.S. equities that persisted for over a year. If this win-rate metric can effectively break above 50% and sustain an uptrend over a longer cycle, it would become a key precursor to Bitcoin re-establishing its leadership in the macro capital pricing system relative to traditional equity assets.

Absorbing Binance's Historic Theft Shock

On October 29, Binance, the world's largest exchange, officially disclosed a major security incident in which its hot wallet was attacked, with the platform itself stating the involved funds amounted to approximately $6.3 billion. This makes the event indisputably the single largest hacker theft by loss magnitude since the crypto industry's inception, with the scale even exceeding the combined historical losses of the previous top nine industry security incidents.

Chart: Review of Bitcoin spot price action before and after Binance's historic hack

However, to the surprise of the vast majority of market participants: within days of the event breaking, Bitcoin's spot price experienced only a brief dip