Expert-Reviewed Insights: Understanding Bitcoin’s Supply in Profit
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Analyzing Bitcoin’s Supply in Profit: A Recent Surge
Recent on-chain data reveals a significant increase in Bitcoin’s Supply in Profit. The rise prompts an analysis of whether this level is considered excessive or within a typical range.
Bitcoin Supply in Profit Surpasses 87%
The latest insights from Glassnode indicate that Bitcoin’s Supply in Profit has surged, coinciding with the latest upward movement in the cryptocurrency’s price.
Understanding the Supply in Profit Indicator
The “Supply in Profit” metric assesses the percentage of the total Bitcoin supply that is currently held with unrealized gains. This indicator examines the transaction history of each Bitcoin in circulation to determine the last price at which it was moved. If this previous transaction price is beneath the current market rate, the coin is considered to be in profit and is included in the Supply in Profit calculation.
An alternative metric, known as Supply in Loss, captures coins whose acquisition cost exceeds the current price. Together, these metrics account for the entire Bitcoin supply, with their sum equaling 100%. Therefore, knowing one allows for the calculation of the other by subtracting it from 100.
Recent data shows a marked increase in this metric, reflecting the recent price appreciation of Bitcoin.
Current Statistics and Market Implications
Currently, the Supply in Profit stands at 87.3%. When Bitcoin was previously valued near $94,000, this indicator was at 82.7%. This suggests that nearly 5% of the supply acquired at peak bull market prices has since been transacted at lower price levels.
Historically, investors in profit tend to liquidate their holdings, which can lead to market overheating. However, sustained high levels of Supply in Profit may indicate robust market demand, allowing Bitcoin’s price to remain stable despite potential sell-offs.
Glassnode notes, “An enduring phase where this metric stabilizes above 90% often precedes a euphoric market phase, marked by widespread profitability and increased investor confidence.” At present, Bitcoin hasn’t yet entered this phase.
Current Bitcoin Price Trends
Bitcoin recently surpassed the $95,000 mark, although a minor correction has since adjusted its price to approximately $94,800.
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