As a seasoned analyst with years of experience delving into the intricacies of Bitcoin and other cryptocurrencies, I find myself closely watching the Bitcoin Supply in Profit indicator. The recent pattern it has been forming is reminiscent of a see-saw, oscillating between the bull market and transition zones.
The analysis of on-chain data reveals a potential pattern emerging in the Bitcoin Profit Ratio, which might pose a threat to the ongoing bull market trend.
Bitcoin Supply In Profit Has Seen Multiple Dips Into “Transition” Zone Recently
Based on an analysis by a crypto expert in a CryptoQuant Quicktake article, the rising “Bitcoin held at a profit” pattern might indicate an opportune moment to consider entering the transition area for Bitcoin.
In simpler terms, “Supply in Profit” is a measurement on the blockchain that monitors the proportion of all Bitcoin in circulation that currently holds some amount of unrealized profit (the difference between the current market price and the price at which it was last purchased).
This tool operates by examining the transaction history for every coin within the network to identify the price at which they were last transferred. Since the previous transaction usually marks when a coin was last traded, the price during that time can be seen as its original cost.
If the historical selling price of a given cryptocurrency is less than its current market value (spot price), it means that coin is currently yielding a profit. The total supply of such profitable coins is accumulated, and their percentage within the overall supply is calculated. This is often referred to as the Supply in Profit.
Additionally, there’s a measure known as the Opposite Type Token Supply, which operates much like the Supply in Profit, but instead, it monitors the tokens of the opposite kind.
Now, here is a chart that shows the trend in the Bitcoin Supply in Profit over the last few years:
According to the graph shown, approximately 85% of all circulating Bitcoins are currently in profit, which is a significant figure. In the past, this percentage has often signified the bull market stage within the Bitcoin’s price cycle.
After the recent price surge to $64,000, the metric has now climbed back up to its current value. Previously, it had dipped below the 80% threshold, moving it into a transitional area between bullish and bearish markets.
It’s not a bad thing that Bitcoin has returned to the bull market territory, but the current trend might make some question if this recovery will be sustainable.
The graph demonstrates that, similar to other indicators, there was a pattern of falling into a transitional phase and rebounding in July. However, this increase didn’t persist for an extended period.
The analyst has noted that the trend of Bitcoins in profit has been generally decreasing over the past few months, increasing the likelihood of this metric dropping further soon.
If the signal shows another dip towards the transition area, there’s a chance Bitcoin might experience a prolonged price decrease that could potentially trigger a fresh bear market.
Only time will tell how the Bitcoin price evolves, and consequently, the amount of profit in circulation, in the upcoming days.
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In the past week, Bitcoin’s value has climbed approximately 10%, pushing it up to around $63,900.
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2024-08-27 05:46