Recent on-chain data indicates that the Bitcoin Supply in Profit has yet to drop below a significant threshold during the current market cycle, presenting a potentially optimistic outlook for BTC. This observation comes as analysts scrutinize the BTC metrics to gauge market sentiment and price directions.
Bitcoin Supply in Profit Has Remained Above 70% So Far
In a recent CryptoQuant Quicktake, an analyst highlighted the ongoing trend in Bitcoin’s Supply in Profit. This important indicator tracks the percentage of Bitcoin in circulation currently held at a net unrealized profit.
The methodology behind this metric involves analyzing the transaction history of each Bitcoin to determine the price at which it was last moved. If the current market price exceeds this transaction level, then that Bitcoin is regarded as holding some net gain. By aggregating all tokens that meet this criterion, the Supply in Profit is computed, providing insights into market health.
Conversely, a metric known as the Supply in Loss quantifies the tokens currently holding a loss. This metric complements the Supply in Profit, as their combined values total 100%.
A visual representation of the Bitcoin Supply in Profit over recent years is displayed below:
The above chart illustrates that the Bitcoin Supply in Profit previously reached a remarkable 100% as the cryptocurrency surged to new all-time highs. However, recent price corrections have seen this indicator experience a noteworthy decline.
Notably, the chart highlights two levels of importance. The lower bound, marked in orange, is set at 70%. Historically, breaching this level has often heralded the onset of a bear market for Bitcoin. During the current cycle, Bitcoin has not yet fallen below this critical threshold, although it did come close during last year’s consolidation phase. Moreover, a level of 80%, shown in yellow, has been crossed multiple times this cycle.
Despite a recent correction that temporarily forced the Supply in Profit down, a recovery rally suggests that Bitcoin may soon retest this vital level. Historical patterns indicate that an initial breakthrough above this line often signals the beginning of a bullish trend for the cryptocurrency.
As per the analyst’s observations, the next goal is to elevate the Supply in Profit back to 80%, which would indicate a robust bullish momentum for BTC.
BTC Price
The current price action for Bitcoin reflects some retreat following its recent upswing, with the asset now positioned at approximately $83,900.
