The Bitcoin profit supply has been declining, according to data. However, the level of Bitcoin supply has not fallen as far as it did at the bear market’s bottoms.
About 50% of the Bitcoin Supply is in Profit at The Moment
Glassnode’s latest weekly report shows that profitability levels for the BTC market remain above historical bottoms of 40%-42%.
The “percent supply in profit” is an indicator that measures the total percentage of the Bitcoin supply that’s currently holding some unrealized profit.
It works by looking at the history of every coin in circulation to find out its last traded price. This indicator calculates the coin’s profit if its previous price is less than its current BTC value.
Here’s a chart showing the trends in 7-day moving average Bitcoin% supply of profit in profits since January 2014.
The 7-day MA of this metric appears to be declining. Source: Glassnode’s The Week Onchain Week 41 2022| Source: Glassnode's The Week Onchain - Week 41, 2022
The graph above shows the historic zones for Bitcoin percent supply and profit in previous bear markets.
The price of crypto seems to have fallen cyclically whenever the metric falls below 50%.
More specifically, the indicator’s value was round 40%-41% in the 2014-15 bear, while it was 41%-42% during the 2018-19 bear.
The COVID crash saw the profit in supply reaching a 47% mark, but since the event wasn’t part of a normal cycle, the relatively higher level during this low may not be as relevant.
The indicator is currently at 50% in the bear market of 2021-22.
If the 40% to 42% supply in profit target for the cyclical low from the previous bear markets holds this time as well, then Bitcoin’s current profitability is still around 10% higher.
The crypto market may need to experience another wave of unrealized profits, before it is overtaken by the bulls.
At the time of writing, Bitcoin’s price floats around $18.9k, down 6% in the last week. In the last month, crypto lost 12%.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Featured image by Natarajan sethuramalingam at Unsplash.com. Also charts from TradingView.com. Glassnode.com.