Bitcoin Supply in Profit Soars to 87%: Is a Price Peak Near?

Bitcoin’s “Supply in Profit,” a key on-chain metric tracking the percentage of BTC held at a profit, has surged to 87.3%, according to Glassnode. This signifies a substantial increase in the number of Bitcoin coins currently trading above their acquisition cost. The metric calculates this by analyzing each coin’s last transaction price against its current market value. If the current price exceeds the last transaction price, it’s considered ‘in profit.’ Conversely, coins with a last transaction price higher than the current market price fall under “Supply in Loss.” These two metrics always add up to 100%.

The recent rise in the Supply in Profit metric is directly correlated with Bitcoin’s price rally, reaching levels not seen since Bitcoin traded around $94,000. Interestingly, around 5% of the supply bought at those previous bull market highs has since changed hands at lower prices. Historically, high levels of Supply in Profit have often preceded price corrections as investors cash in their profits. However, a sustained high Supply in Profit can also be positive, indicating strong underlying demand supporting the price despite profit-taking.

Glassnode points out that a typical “euphoria” phase in Bitcoin’s market cycle is usually marked by the Supply in Profit metric stabilizing above 90% for a prolonged period. This suggests widespread profitability and high investor confidence. While the current 87.3% level is significant, it hasn’t yet reached this euphoria threshold. Bitcoin’s price briefly touched $95,000 before experiencing a minor pullback, currently trading around $94,800. The interplay between the Supply in Profit metric and Bitcoin’s price action will continue to be closely watched by market analysts to gauge the potential for further price increases or corrections.

(Source: https://bitcoinist.com/bitcoin-supply-profit-hits-87-euphoria-levels-yet/)