As a seasoned analyst with over two decades of experience in the financial markets, I have seen numerous bull and bear cycles, and I can confidently say that the current state of Bitcoin is intriguing. With 94% of Bitcoin supply now in profit, it’s hard not to feel a sense of deja vu. Historically, such high levels of profitability have often been followed by significant price drops, suggesting that we may be witnessing a repeat of history.
Approximately 94% of Bitcoin (BTC) owners are currently seeing a profit as BTC has surged beyond its 2021 peak price of $69,000. However, could this surge lead to quick selling at this crucial price point in the near future?
94% of all BTC is back in profit
According to data from market intelligence firm CryptoQuant, as analyzed by independent analyst Axel Adler Jr, it appears that approximately 94% of Bitcoin’s total supply is currently generating a profit. The majority of these Bitcoins were likely bought when the price was around $55,000.
According to Checkonchain expert Checkmate, Short Term Holders who purchased Bitcoin during its recent price dips have been handsomely rewarded due to Bitcoin’s increased profitability. He further noted that a majority of these investors have recouped their initial investment, or as he put it, “most STHs now find themselves in the black.
“This reinforces Buy-the-Dip behavior, and is a sentiment tailwind”
Historically, when there’s an abundance of Bitcoin held by people who are in profit, it often signals a potential major price decline due to investors cashing out at higher prices.
In simple terms, when the metric hit those highs around late September, Bitcoin experienced a drop of about 8.7%, falling from approximately $65,800 on September 28 to below $60,000 on October 3. This decline was due to investors and traders cashing in their short-term profits.
In March 2024, the price reached unprecedented peaks above $73,800 due to investments flowing into Bitcoin ETFs in the U.S. and excitement about the upcoming Bitcoin halving event. However, within a few weeks, the BTC price dropped by 23%, falling from $73,835 to a low of $56,500 on May 1st.
During previous Bitcoin bull runs, similar patterns were observed where a surge in the number of Bitcoins that were profitable to hold followed the 2017 and 2021 market rallies. This increase in profit-taking Bitcoins often preceded subsequent bear market cycles.
Bitcoin price runs into major resistance at $69K
Despite the recent bullish price recovery, Bitcoin was rejected at $69,000.
According to the analysis by Japanese trader Jusko Trader, published on October 22 on platform X, Bitcoin ($BTC) seems to be encountering resistance from a significant area with high trading volume (liquidity zone).
Over the past six months, that trading zone ranging from roughly $67,300 to $69,400 has consistently presented a strong resistance for the trader.
As of its release, Bitcoin was being transacted under the $67,200 price range. However, Jusko Trader considers the recent decline as a beneficial correction and anticipates that Bitcoin’s upward trend will persist.
“BTC’s bullish momentum is more. These minor corrections are healthy for major pullback as they bring more/new cash flow.”
As an analyst, I’m sharing some insights about a potential impact on the market. If Bitcoin surpasses the $68,000 threshold, approximately $1.65 billion in leveraged short positions could be forced to close across all exchanges. This means that those who have bet against Bitcoin could potentially face significant losses.
Over the next few days, potential influxes into U.S. spot Bitcoin ETFs could potentially propel Bitcoin to surpass that level.
Since October 11th, investments into U.S. Bitcoin Exchange-Traded Funds (ETFs) have been steadily increasing, accumulating a total of $21.2 billion by October 22nd, as per the data from Farside Investors.
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2024-10-22 16:31