While some investors seemed ready to take profits as the price of bitcoin surged past $60,000 on Wednesday, many others seemed content to hold. 

Bitcoin has broken the $60,000 barrier, at one point coming within 9% of its all-time high—just over $69,000 in November 2021—leading investors to ponder whether they should sell and take profits or continue holding.

The dominant cryptocurrency’s rally has been largely fueled by demand from multiple spot bitcoin exchange traded funds (ETFs) that were approved by the U.S. Securities and Exchanges Commission (SEC) earlier this year. Nearly $7 billion has flowed into the various funds, according to data from London-based investment management firm Farside Investors. The data shows exponential growth of cumulative inflows since late January, shortly after the historic approvals.

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— BitMEX Research (@BitMEXResearch) February 28, 2024

Read more: Bitcoin Watchers React to BTC Returning to the $60,000 Mark

In addition to the inflows, bitcoin’s price may also be impacted by the upcoming halving event – a pre-programmed reduction in the pace of new issuance of the cryptocurrency that occurs every 210,000 blocks, or roughly every four years.

That reduction will take place sometime in April, reducing the amount of new bitcoin generated via mining from 6.25 BTC to 3.125 BTC. The event often triggers an appreciation in price given the decrease in supply.

With the number of newly-created coins on the verge of being cut by 50% and data suggesting a continued upward trend in ETF inflows, some investors are mulling over the decision to sell now or continue holding their bitcoin for bigger profits down the road.

“One of our multi-asset portfolio managers sold some bitcoin today,” Matthew Sigel told Unchained. Sigel is the head of digital assets research at investment management firm VanEck.

Using MVRV to Make Selling Decisions

In a previous interview with Unchained, Sigel explained how both short and long-term investors use a metric called market value to realized value, or MVRV, to decide on the ideal price to sell their BTC.

Realized value or price represents the average value of all bitcoin at the time those coins last moved on-chain, much like the cost basis of an asset in traditional accounting. MVRV is calculated by dividing bitcoin’s market value by its realized value. When market value exceeds realized value by a significant margin, investors tend to sell and take profits.

“You can look at it for short-term holders, those who’ve held bitcoin for less than half a year,” Sigel said. “The blowoff top level is generally 1.4 to 1.7x on short-term MVRV.” 

In other words, when short-term investors encounter price appreciation in the 40-70% range in relation to their cost basis, they usually sell (Sigel had previously observed the level to be 1.2, equating to selling after a 20% rise). Conversely, he says longer-term investors want much higher returns.

Sigel provided a screenshot from on-chain market intelligence platform Glassnode, showing a “short-term holder MVRV” of roughly 1.4 as of Feb. 26, meaning many short-term traders have likely already locked in their profits and sold off their holdings, according to Sigel’s calculations. 

“On a long-term basis, usually the sellers don’t materialize until the ratio is 10x … and we are nowhere near that point,” he added.  

Michael Tanguma, CEO and co-founder of Onramp, a bitcoin-focused investment firm that manages a spot bitcoin trust for high-net-worth investors, agrees that MVRV is a good metric to guide selling decisions, but emphasized his firm’s long-term holding philosophy.

“We maintain a very long-term thesis that bitcoin is money,” Tanguma told Unchained. “Taking profits, that is, exchanging BTC for fiat, is largely antithetical to this long-term thesis.”

Long-Term Investors Are Staying Put

While short-term investors may indeed cash in on bitcoin’s current rally, the general consensus is that longer-term holders of the asset won’t liquidate their positions at today’s prices. If the cryptocurrency needs to reach an MVRV of 10 before long-term investors start selling as Sigel  assumes, then a large-scale sell-off may turn out to be much further down the road.

Christopher Calicott, managing director at Trammell Venture Partners, a venture capital firm that invests exclusively in Bitcoin companies, told Unchained that selling right now “feels like a fool’s errand.”

Calicott, much like Tanguma, has adopted a long-term holding strategy and shies away from short-term strategies regardless of how attractive the MVRV ratio looks.

“We’re definitely in the ‘don’t sell’ camp,” Calicott said. “With the amount of buying that’s taking place, selling feels like an absolute error, regardless of what happens later this year.”

Calicott also pointed out that historically, bitcoin bull runs often top out roughly 16 to 18 months after a halving, which in this case  would be well into 2025.

“Would now be a good time to think about taking some [profits] off the table?” Calicott said. “You can’t tell someone else what they should do, but I can tell you for me, I would feel like an idiot making that move right now.”