Bitcoin Supply In Profit Continues Decline, But Still Not At Historical Bottom Zone

Keshav Verma

1 year ago

3 mins read

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Data shows the Bitcoin supply in profit has continued its decline, but the metric has still not reached levels as low as the previous bear market bottoms.

Around 50% Of The Bitcoin Supply Is In Profit At The Moment

According to the latest weekly report from Glassnode, the current profitability levels in the BTC market are still above the 40%-42% values that were observed during historical bottoms.

The “percent supply in profit” is an indicator that measures the total percentage of the Bitcoin supply that’s currently holding some unrealized profit.

The metric works by checking the on-chain history of each coin in the circulating supply to see what price it was last moved at. If for any coin this previous price was less than the current BTC value, then that particular coin is in some profit at the moment, and the indicator accounts for it.

Now, here is a chart that shows the trend in the 7-day moving average Bitcoin percent supply in profit since the January of 2014:

The 7-day MA value of the metric seems to have been declining in recent days | Source: Glassnode's The Week Onchain - Week 41, 2022

As you can see in the above graph, the historical zones of the Bitcoin percent supply in profit for previous bear markets are highlighted.

It looks like whenever the metric has sunk below the 50% mark, the price of the crypto has observed cyclical lows.

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.

In the current 2021-22 bear market, the indicator has been declining, but has only made a slight touch of the historical bottom zone so far as its value is around 50% currently.

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.

This would suggest that the crypto may have to go through another flush of unrealized profits before the sellers are exhausted and the bear bottom is in.

BTC Price

At the time of writing, Bitcoin’s price floats around $18.9k, down 6% in the last week. Over the past month, the crypto has lost 12% in value.

Looks like the price of the coin has been slowly heading downhill since a few days ago | Source: BTCUSD on TradingView

Featured image from Natarajan sethuramalingam on Unsplash.com, charts from TradingView.com, Glassnode.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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