On-chain data shows that the for-profit supply of bitcoin has taken a significant hit following the decline the cryptocurrency has recently experienced.
bitcoin supply in profits fell to around 81% during the crisis
As explained by an analyst on CryptoQuant Quicktake bitcoin-in-supply-profitloss” target=”_blank” rel=”noopener nofollow”>mailThe latest cryptocurrency crash has caused a portion of the supply to sink.
The relevant on-chain indicator here is the “Supply at Profit”, which, as the name suggests, measures the percentage of the total bitcoin supply in circulation that is currently generating some unrealized profits.
This metric works by reviewing the transaction history of each currency in circulation to find the price at which it last moved. Assuming this last transaction of the currency was the last time it changed hands, the price at that time would denote its current cost basis.
As such, if the current spot price of the cryptocurrency is higher than this cost basis, the coin could be considered to have some gains at the moment. Supply in Profit adds up all the coins that meet this condition and calculates what percentage of the supply they represent.
Naturally, an opposite metric called “Supply in Loss” tracks the rest of the coins. Since the total bid must add up to 100%, the value of this last indicator can also be found by simply subtracting the profit bid from 100.
Now, here is a chart showing the trend of both indicators for bitcoin over the past few years:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/06/Bitcoin-Supply-in-Profits-Dropped-to-81-After-Market-Crash.png" alt="bitcoin offer in profit” width=”1280″ height=”600″ data-recalc-dims=”1″/>
Looks like the Supply in Profit has been going down in recent days | Source: bitcoin-in-supply-profitloss" target="_blank" rel="noopener nofollow">CryptoQuant
As shown in the chart above, bitcoin supply in earnings has seen a sharp decline along with the latest drop that the asset's price has gone through.
At the bottom of this drop, bitcoin had briefly fallen below $60,000, which had reduced the bid in profits to around 81%. Naturally, the losing bid had simultaneously seen an increase to 19%.
“Currently everything seems to be progressing normally and the decline follows the usual pattern,” says the quant. “If the price drops a little further, we anticipate that the profit percentage will fall to the 70-76 range.”
Now, what is the relevance of this indicator for the price of the cryptocurrency? Statistically, investors with profits are more likely to sell than those with losses, so a large number of holders in the green could increase the possibility of a market sell-off.
For this reason, a cooldown in Supply in Profit may actually be a positive development for the cryptocurrency as it suggests there are fewer potential sellers left.
Currently, the indicator value remains relatively high for bitcoin, but it is worth noting that during bullish periods, the metric typically tends to remain near high levels, so a drop from the current degree could be enough for the asset to reach a bottom. .
The May low, for example, also occurred alongside similar levels of profit bidding. It now remains to be seen whether the indicator's latest values will also lead to another bottom for the cryptocurrency.
btc Price
bitcoin has seen a small rebound since its drop below $60,000, as the coin's price has now climbed back above $61,000.
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The price of the coin appears to have gone through a plunge over the last couple of days | Source: BTCUSD on TradingView
Dall-E Featured Image, CryptoQuant.com, TradingView.com Chart
