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Data shows that Bitcoin supply in profit has continued its decline, but the stat has still not reached levels as low as the previous bear market bottoms.
About 50% of Bitcoin’s supply is profitable right now
According to the latest weekly report from glass nodecurrent profitability levels in the BTC market are still above the 40%-42% values observed during historical bottoms.
the “percent offer in profit” is an indicator that measures the total percentage of the Bitcoin supply that currently has unrealized gains.
The metric works by checking the on-chain history of each coin in the circulating supply to see what price it last moved at. If for a coin this previous price was lower than the current BTC value, then that particular coin has some gains at the moment, and the indicator explains this.
Now, here is a chart showing the trend in 7-day moving average Bitcoin percentage in profit since January 2014:
The 7-day MA value of the metric seems to have been declining in recent days | Source: Glassnode's The Week Onchain - Week 41, 2022
As you can see in the chart above, the historical zones of Bitcoin percentage in gains for past bear markets are highlighted.
It seems that when the stat has sunk below 50%, the price of the crypto has observed cyclical lows.
More specifically, the value of the indicator was about 40%-41% in the 2014-15 bear, while it was 41%-42% during the 2018-19 bear.
The COVID crash saw supply gains reach 47%, but as the event was not part of a normal cycle, the relatively higher level during this low may not be all that relevant.
In the current 2021-22 bear market, the indicator has fallen but has only slightly reached the historic bottom zone, as far as the value is currently around 50%.
If the 40% to 42% supply target for the cyclical low of previous bear markets holds up this time around, Bitcoin’s current profitability is still about 10% higher.
This would suggest that the crypto may still have to go through a stream of unrealized gains before the sellers are exhausted and the bear bottom is in.
At the moment of writing, The price of Bitcoin hovers around $18.9k, down 6% over the past week. Over the past month, the crypto has fallen 12% in value.
Looks like the price of the coin has been slowly heading downhill since a few days ago | Source: BTCUSD on TradingView
Featured image from Natarajan sethuramalingam on Unsplash.com, charts from TradingView.com, Glassnode.com