Bitcoin Supply in Profit % in the “Caution Zone”
The bitcoin price is trading close to all-time highs – which is technically a good thing if you’re bullish. But the “bitcoin supply in profit” chart says it could be wise to keep your wits about you. Over 95% of bitcoin holders are now sitting in profitable positions. When many holders are in profit, even a small wave of selling can move the price.
What does “bitcoin supply in profit %” mean?
This chart tracks how much of bitcoin’s supply is sitting on paper gains. First, it checks the last time each portion of bitcoin moved wallets on the blockchain. Next, it records the bitcoin price at the time of that move (it interprets each move as a “sale”). Then it compares that price to today’s bitcoin price. If today’s price is higher, that portion of bitcoin is in profit, according to the indicator.
The chart shows the 7-day moving average of the bitcoin supply in profit. This way, it smooths out short-term noise to focus on the broader trend.
What’s the indicator saying now?
The bitcoin supply in profit line is now sitting at 97.08% – that’s a lot of profitable bitcoin positions. Sure, they might all be looking to stay invested if there’s a bitcoin breakout above all-time highs. But if bitcoin starts to wobble, and sentiment shifts, plenty of holders may look to get out.
Major bitcoin tops tend to happen when over 90% of the bitcoin supply is in profit (red zone, in the chart). At least, that’s what happened with all the major bitcoin tops from 2017, 2019, and 2021. Many investors ended past market cycles with paper losses.
But it’s not an exact science: some of bitcoin’s wildest rallies have happened when investors got greedy – before the chickens came home to roost.
On the flipside, bitcoin’s put in major lows when the supply in profit was in the green zone (below 60%). Those have been phenomenal buying opportunities.
We’ll see it back down there again at some point – the question is “when”.
As usual, none of this is investment advice. If you liked this analysis, check out my free newsletter for how-to guides and investment insights across crypto, stocks, metals, and more.
