Bitcoin’s price has been on a tear lately, and that’s reflected in a key on-chain metric: the percentage of Bitcoin supply currently held at a profit. Let’s dive into what that means and whether it signals a price peak.
What is “Bitcoin Supply in Profit”?
The “Bitcoin Supply in Profit” tracks the percentage of all Bitcoins currently being held at a profit. It works by looking at each Bitcoin’s transaction history. If a Bitcoin was last bought at a lower price than the current market price, it’s considered “in profit.” There’s also a “Supply in Loss” metric, which tracks Bitcoins held at a loss. These two always add up to 100%.
The Numbers: A Near Record High
Recently, this “Supply in Profit” metric hit a whopping 87.3%! That’s a significant jump. Interestingly, even when Bitcoin hit nearly $94,000 previously, this metric was only at 82.7%. This suggests a considerable amount of Bitcoin bought at the previous peak has changed hands at lower prices.
What Does This Mean for Bitcoin’s Price?
Generally, when people are in profit, they’re more likely to sell. Historically, extremely high “Supply in Profit” levels have often preceded a Bitcoin price drop. However, a sustained high level can also be a positive sign. It means there’s strong enough demand to keep the price up despite profit-taking.
Glassnode, a blockchain analytics firm, points out that a true “euphoria” phase usually happens when this metric stays above 90% for a while. This shows widespread profitability and high investor confidence. We’re not quite there yet.
Current Bitcoin Price and Outlook
Bitcoin briefly touched $95,000 but has since pulled back slightly. Whether this high “Supply in Profit” metric will lead to a significant price correction remains to be seen. It’s a situation to watch closely.