On-chain data suggests Bitcoin supply in profit nearing top levels
According to analyst James Van Straten, the Bitcoin Percent Supply in Profit is approaching a level that has historically signaled a top for the cryptocurrency. This on-chain indicator tracks the percentage of the Bitcoin supply that carries unrealized gains. By analyzing the blockchain history of each coin, the metric determines if the last transaction price was lower or higher than the current spot price. If it was lower, the coin is considered in profit. The recent bullish push has caused the Percent Supply in Profit to surge. When this indicator reaches values greater than 95%, it typically indicates a top for Bitcoin.
Understanding the indicator
The Bitcoin Percent Supply in Profit measures the percentage of coins in circulation that are currently carrying a profit. Its counterpart, Percent Supply in Loss, tracks coins with unrealized losses. These two indicators add up to 100% of the supply. When a large portion of the supply is in profit, there is a higher likelihood of investors selling their coins, leading to a potential market selloff.
Historical patterns and current levels
The chart provided by Van Straten shows that Bitcoin’s Percent Supply In Profit has reached levels close to the 95% cutoff, which has historically been associated with tops for the cryptocurrency. When more than 95% of the supply is in profit, it suggests that many holders are likely to sell their coins. Conversely, when the supply in profit is below 50%, it often indicates bottoms for Bitcoin as there are fewer profit sellers left in the market. With the current high levels of Percent Supply In Profit, Bitcoin may be approaching a local top.
Bitcoin price movement
After reaching around $49,000 during its latest rally, Bitcoin has retraced towards the $47,900 level. The cooling off period follows the surge in price and aligns with the potential top signaled by the Percent Supply In Profit indicator.
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