Bitrabo Editorial
Recent data from on-chain sources highlights a significant decrease in the Bitcoin Supply in Profit following the cryptocurrency’s recent market downturn.
Bitcoin Supply In Profit Drops To Around 81% During Market Downturn
An analyst’s assessment in a CryptoQuant Quicktake post reveals that the recent market decline has led to a portion of the circulating Bitcoin supply now showing unrealized losses.
The crucial metric of interest here is the “Supply in Profit,” which tracks the percentage of the total circulating Bitcoin supply currently holding unrealized profits.
This metric analyzes each coin’s transaction history to determine its current cost basis by identifying the price at which it was last moved. If the current price is higher than this cost basis, the coin is deemed to be in profit. The Supply in Profit calculates the portion of the supply in this profitable state.
A complementary metric, the “Supply in Loss,” tracks the remaining coins with unrealized losses, completing the 100% total supply calculation by subtracting the Supply in Profit value.
The chart below illustrates the trends in both these metrics for Bitcoin over the past few years:
The chart depicts a sharp decline in Bitcoin’s Supply in Profit following the recent market downturn when the price briefly fell below $60,000, causing the Supply in Profit to drop to around 81%, with the Supply in Loss rising to 19%.
The analyst anticipates that if the price continues to decrease, the profit percentage may fall further to the 70-76% range.
This indicator’s significance lies in the fact that profitable investors are more inclined to sell, potentially triggering a market sell-off. Therefore, a reduction in the Supply in Profit could be positive as it indicates fewer potential sellers in the market.
While Bitcoin’s current Supply in Profit remains relatively high, a decline from these levels could signal a potential market bottom during bullish periods, similar to the levels observed during a previous market low in May.
The future trajectory of the market will reveal whether the current Supply in Profit values will lead to another market bottom for Bitcoin.
Bitcoin Price Movement
After briefly dropping below $60,000, Bitcoin has experienced a modest recovery, with the price now above $61,000.