According to data, around 15% of Bitcoin’s total supply are in losses. This is a figure that historically has been enough to drive the price down.
The percentage of Bitcoin supply in profit has fallen to just 85%
The latest Glassnode weekly report shows that the BTC total supply in profit is down to just 85 percent this week. This means that only 15% of the supply remains in loss.
The “percent supply in profit” is a Bitcoin indicator that highlights the share of the total supply that’s currently in profit.
It works by looking at the price that each coin was sold at when it was first moved. The coin will be considered in profit if the price is lower than its current value. If the price is higher than current, then it’s considered that the coin has lost its value.
An indicator that reaches a high value (above 95%) could lead to a Bitcoin market top. But if the metric’s values are low enough (less than 5%), then a bottom could be formed instead.
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Below is a chart which shows how profit has changed over the past 12 months.
Source: The Glassnode Week Onchain (Week 47)| Source: The Glassnode Week Onchain (Week 47)
As the above graph shows, the percent supply in profit has severely fallen off in the past week as Bitcoin’s price declines. Around 15% of total supply are now in loss.
The report mentions that the 85%-90% zone may be considered as a “bull and bear transition zone.” There are two instances of the indicator entering this zone previously in the chart.
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This was the first time the Bitcoin crash occurred in May, while the El Salvador Day crash coincided. A value of 85% will push crypto’s prices down, provided that no other value is achieved within a reasonable time frame. The situation is very similar to those cases.
At the time of writing, Bitcoin’s price floats around $56.8k, down 6% in the last seven days. In the past month, Bitcoin’s price has fallen 5%.
The chart below shows how Bitcoin’s prices have changed over the course of the past five business days.
Source: BTCUSD tradingview| Source: BTCUSD on TradingView
Bitcoin’s price has remained below $60k for the past week. Currently, it’s unclear when the coin may recover, but if the percentage of supply in profit is anything to consider, BTC may decline even further.
Unsplash.com featured image, Charts from CryptoQuant.com and TradingView.com charts