Bitcoin Supply in Loss Drops to 2% as Price Surges 37%

Bitcoin has shown remarkable resilience, with its supply in loss dropping below 2%, indicating a significant shift towards profitability among holders. Over the past month, Bitcoin's price surged from $76k to a local high of $104k, pushing the percentage of profitable holders to a cycle high of 98%. This shift has led to a historical low of just under 2% for the supply in loss, according to CryptoQuant.

Historically, such conditions align with early market euphoria, where the vast majority of holders are enjoying profits. The Net Unrealized Profit/Loss (NUPL) has increased consecutively over the past week, reaching a value of 0.56. This indicates that while holders feel confident, some caution remains as they anticipate further price increases.

The current optimism surrounding Bitcoin can change rapidly. When BTC Supply in Loss drops to between 0–2%, it typically accompanies late-stage bull runs. This stage often leads to overconfidence among holders as they become more comfortable with their positions. Historical data shows that when NUPL reaches 0.75, a significant phase in market psychology begins. The risk of distribution rises notably at this stage. Long-term holders may see this as an opportunity to mitigate their risks, while newer investors might chase the gains, resulting in a disparity in market sentiment.

Recent data shows that holders are starting to distribute their assets as profit realization among traders increases. Notably, exchange netflows have turned positive, with 756 BTC moving onto exchanges in the last 48 hours. This shift signifies more deposits than withdrawals, a trend that often aligns with rising selling pressure. Historical cycles indicate that positive netflows tend to materialize before local tops.

With this familiar pattern reemerging, it raises the question of whether Bitcoin will follow its historical trajectory and reach another cycle’s peak. Currently, the remarkably low percentage of supply in loss signifies a mature market phase. Positive exchange flows hint at potential distribution, indicating the market might soon encounter an overheated state. If historical trends hold, Bitcoin could face a corrective phase, potentially slipping below $100k towards $96k. However, if the price maintains momentum, BTC could target a resistance level of $106K, which has previously posed challenges, before attempting to breach the $109k mark seen in January 2025.

As Bitcoin’s market landscape evolves, understanding the implications of the current profitability levels is crucial. The mix of nostalgia and caution is palpable as investors weigh their options. With significant price levels ahead, the onus will be on discerning both market signals and behavioral psychology among investors.