- The percentage of BTC supply in profit has declined by 15% since 5 March
Coin’s Age Consumed and Network Realized Profit/Loss metrics refuted claims of a price bottom
As a researcher with extensive experience in analyzing Bitcoin market trends, I find the recent developments in the BTC supply in profit and related metrics intriguing. The 15% decline in the percentage of Bitcoin supply in profit since March 5, as reported by Santiment, is concerning. This drop indicates that an increasing number of investors are holding their coins at a loss, which could lead to further sell-offs if the price correction continues.
According to the most recent report from Santiment (previously known as X), only 84.4% of the total Bitcoin supply is currently in profit – a figure not seen since two months ago.
According to the data from the on-chain provider, these figures reached a peak of 99.93% during the first five months of the year on March 5th. Nevertheless, they have since decreased as shown on the graphs.
When the ratio decreases in this fashion, it indicates that a larger number of Bitcoin investors are holding their coins at a loss. This typically occurs following a minor price decrease, causing anxious short-term investors who bought more recently at higher prices to sell off their holdings.
In their post, Santiment analyzed the past trends of the metric and determined that lower values often indicate a more optimistic outlook.
A low supply-in-profit ratio signifies that there are few traders earning a profit from holding onto an asset, which might be seen as a contrarian indicator. When this ratio decreases, it suggests that investors with weak hands or those looking for quick gains have exited the market, leading to increased demand and potentially setting the stage for price recovery. Consequently, a declining supply-in-profit ratio could be an indication that an asset’s price is nearing its bottom, as there are fewer sellers left in the market.
Is the bottom in?
As a seasoned crypto investor, I closely monitor the Age Consumed metric of Bitcoin (BTC) to gauge whether its price has hit rock bottom and if a rally is imminent. This valuable indicator keeps tabs on the movement of long-held, idle coins. Long-term holders typically keep their dormant coins untouched for extended periods. Hence, when they decide to move these coins, it’s a significant event that often triggers substantial market trend shifts.
When this metric increases, it indicates that a substantial number of dormant tokens have started to move to new destinations.
When it drops instead, those coins in a wallet remain untouched and untraded.
Based on Santiment’s analysis, the Age Consumption of Bitcoin has remained steady since April 3rd. This indicates that there haven’t been notable transfers of inactive coins, potentially signaling the absence of a significant price bottom.
One significant indicator to take into account is Bitcoin’s Network Realized Profit/Loss (NPL). This metric measures the gap between the last recorded transaction price on the blockchain and the current market value of the coins. Historically, decreases in NPL have pointed towards a local market bottom. This occurs because these dips often represent the selling pressure from anxious investors, also known as ‘weak hands’, and their subsequent exit from the market. Conversely, the entry of new capital into the market takes place during these times.
As per the same, there is no indication that a price bottom has been reached on the charts yet.
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2024-05-03 21:11