Bitcoin Supply in Profit Holds Above 70% Despite Recent Drawdown

On-chain data indicates that the Bitcoin Supply in Profit has not yet fallen below a critical level during the current cycle, which could be a positive sign for the cryptocurrency. The Supply in Profit metric tracks the percentage of the total Bitcoin supply that is held at a net unrealized profit. This is determined by examining the transaction history of each coin to see the price at which it was last moved, which represents its cost basis.

If the acquisition price of a coin is below the current spot price, it is considered to be holding a net gain. The Supply in Profit metric aggregates all tokens meeting this condition and calculates the proportion of the supply they represent. Conversely, the Supply in Loss metric deals with tokens that are in a net loss, and its value can be found by subtracting the Supply in Profit from 100%.

Historically, the Bitcoin Supply in Profit has reached 100% during periods when the cryptocurrency's price hit new all-time highs. However, with the recent drawdown, the indicator has decreased. During the last cycle, dropping below the 70% level marked the beginning of a bear market for Bitcoin. So far in the current cycle, Bitcoin has not fallen below this level, with the closest approach occurring during last year’s consolidation phase. The 80% level, which has been breached a few times this cycle, is another significant marker. The recent correction took the Supply in Profit below this level, but the subsequent recovery rally has brought it close to retesting it again. Historically, the initial break above the 80% line has signaled the start of a bull market for Bitcoin.

According to the analyst, the next target is to push the Supply in Profit back to 80% to signal strong bullish momentum. This would indicate that a significant portion of the Bitcoin supply is in profit, which could drive further price increases. The recent trend in the Bitcoin price has seen a slight retracement, with the price slipping back down to $83,900. However, the overall pattern suggests that the bull cycle may still be intact, as the Supply in Profit has not yet lost this key level.