On-chain data shows 13% more of the Bitcoin supply has gone back into the green as BTC has broken past the $18,200 level today.
Bitcoin Percent Supply In Profit Has Grown To 60.5% Now
According to data from the on-chain analytics firm Glassnode, the supply in profit was below 50% not too long ago. The “percent supply in profit” is an indicator that measures the percentage of the total circulating Bitcoin supply that’s carrying some amount of profit right now.
The metric works by going through the on-chain history of each coin in circulation to see what price it was last traded at. If this previous price for any coin was less than the current value of BTC, then that particular coin is holding some profit at the moment, and the indicator accounts for it in the data.
The higher the value of the supply in profit, the higher the number of investors that become likely to sell at any point. This is why tops have coincided with very high values of the indicator in the past.
The counterpart metric of the supply in profit is the “supply in loss,” which naturally measures the opposite kind of supply. Its value can simply be calculated by subtracting the percent supply in profit from 100.
Now, here is a chart that shows the trend in the Bitcoin percent supply in profit over the past year:
As displayed in the above graph, the Bitcoin percent supply in profit had dropped to just 47% between November last year and the start of 2023. This means that a majority of the circulating supply had entered into a state of loss during this period.
Historically, cyclical lows in the price of the crypto have usually formed with a majority of investors going underwater like this (although previous bear markets saw even higher supply recording losses than in the last couple of months).
This is because selling pressure starts getting exhausted at these levels and the final bottom is created as the holders in the red capitulate and transfer their coins to stronger hands. A transition towards bullish momentum then takes place on the back of accumulation from these stronger hands.
Recently, as Bitcoin has been rallying, the percent supply in profit has surged and hit a value of 60.5%. This means that 13% more supply has now come back into a state of profit as compared to the lows in the last two months.
Glassnode notes that this suggests fresh buying indeed took place while BTC saw its recent lows since the only coins that can possibly be in profit right now are those acquired in the $16,500-$18,200 range.
At the time of writing, Bitcoin is trading around $18,200, up 8% in the last week.