70% Of Bitcoin Supply Is In Profit – Why Bulls Need To Defend This Level
January 18 2022 - 2:00PM
NEWSBTC
On-chain data shows about 70% of the total Bitcoin supply is
currently in profit, a level that has historically been important
for bulls. Around 30% Of Total Bitcoin Supply Is Now Underwater As
per the latest weekly report from Glassnode, the percentage of BTC
supply in profit has now fallen off to just 70%. The “percent of
supply in profit” is an indicator that measures the percentage of
the total Bitcoin supply that’s currently in the green. When the
value of this metric increases, it means more coins have started to
get into profit. This leads to holders becoming more probable to
sell their coins in order to harvest their gains. At very high
values of the indicator (more than 95%), the price of Bitcoin has
usually approached a top as profits are realized. On the other
hand, when the metric moves down, it means more coins are entering
into the red. Below certain low levels, investors may capitulate to
cut their losses. However, when more than 50% of the supply is
underwater, bottoms have historically formed. Related Reading
| Green Energy: In NY, Bitcoin Mining Saved The Oldest Working
Hydroelectric Plant Now, here is a chart that shows the trend in
the value of the Bitcoin supply in profit over the last couple of
years: Looks like the value of the indicator has declined recently
| Source: The Glassnode Week Onchain - Week 3, 2022 As you can see
in the above graph, the metric has been falling down since a few
months now. And so at the moment, only around 70% of the Bitcoin
supply is in profit. Related Reading | Bitcoin Miners Show
Strong Accumulation As Their Inventories Spike Up The 70% level
seems to have been significant historically as bulls had to defend
it twice in the past two years. The first instance was shortly
after the COVID crash, between May 2020 to July 2020. The other
instance was 2021’s mini-bear period between May and July. The
bulls came out on top during both the periods after a while of
sideways movement. The report notes that the medium-term outlook of
the price likely depends on how the market responds to the level
this time. If more of the supply enters underwater, those in the
red may finally capitulate. On the other hand, a bullish reversal
can bring more Bitcoin into profit and prevent these holders from
selling here. BTC Price At the time of writing, Bitcoin’s price
floats around $42k, up 0.5% in the last seven days. Over the past
month, the crypto has lost 8% in value. The below chart shows the
trend in the price of BTC over the last five days. BTC's price has
once again stumbled down in the past few days | Source: BTCUSD on
TradingView Featured image from Unsplash.com, charts from
TradingView.com, Glassnode.com
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