59% of Bitcoin holders are profitable because the coin trades above its current realized price, which is the cost base of the average BTC holder, IntoTheblock data on January 19, shows.
parallel to the chain flow shows the realized price of Bitcoin is about $19,700. Comparing this number to the spot BTC price which is currently over $20,700 means that 59% of coin holders are on profit, a net positive for the ecosystem.
This development is a bull’s eye for HODLers, given the sharp drop in prices in recent months. Then BTC plummeted from about $69,000 in November 2021 to just over $15,000 in 2022.
are on-chain data cracked in real time, and analysts interpret them to gauge the state of the market. Their interpretation, in turn, can greatly influence sentiment and determine how retailers trade based on price action.
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As BTC prices react to the $21,600 posted earlier this week, on-chain stats show that more than half of BTC holders are in the green. Only 38% of market participants are out of the money.
Most Bitcoin holders were in the red
Even as BTC appears to be recovering, an extensive breakout needs to happen to bolster and revive demand. Based on Bitcoin’s recent price action, most holders appear to be in the green after a long period of losses.
Trackers show that holders have been losing ground since mid-August 2022. The situation only worsened in the following months as fear, uncertainty and doubt (FUD) flooded the crypto and BTC markets, driving the coin even lower. This decline was due to the unexpected collapse of ftxa cryptocurrency exchange, and Alameda Research, a trading firm closely associated with the Sam Bankman-Fried exchange.
In early November, BTC dropped by more than 65% from 2021 peaks, highlighting the level of concern across the board, driving the realized price even lower.
Realized versus market price
Realized Price is a metric that measures the price of all BTC currently in stock at the rate at which they were purchased. The value obtained is then divided by the BTC in the circulating supply.
The result gives an “average cost basis” which is then used to describe the realized price. It differs from the spot market price because the latter indicates the current price of Bitcoin based on real-time supply and demand. Like any other asset, BTC prices are massively determined by market forces, with the “hype” element, which describes sentiment, another factor to consider.
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That more than half of Bitcoin holders are profitable at spot rates is significant. Realized price helps in assessing the overall economic condition of the Bitcoin market. How this metric fluctuates relative to the market price tells whether BTC holders are afloat or distressed. In technical analysis, realized price can be used to mark resistance or support levels.
Technically, when the realized price exceeds the market price, it indicates that some BTC holders are making a profit. If it falls below the market price, in total a portion of the market participants will be red. Profitability depends on the price level they bought.
Featured image from Flickr, charts from TradingView.com