The data shows that around 15% of total Bitcoin supply is now being lost, a value that has been sufficient in the past to depress the price.
Bitcoin supply percentage of profit has dropped to just 85%
According to Glassnode’s latest weekly report, total BTC supply has dropped to just 85% this week, which means that 15% of supply is now being lost.
The “Percentage Profit on Profit” is a Bitcoin indicator that shows the proportion of the total supply that is currently making profit.
The metric works by examining what price each coin in the chain was last moved at. If that price was lower than the current price, the coin is said to be a win. If this price was higher, the coin is considered lost.
If the indicator reaches very high values (more than 95%), a Bitcoin market high could soon follow. However, if the values of the metric are low enough (less than 5%), a bottom could be formed instead.
Related reading | The IMF report on El Salvador is positive … except for everything Bitcoin-related
Now, here is a graph that shows the trend in the value of the BTC percentage supply in profit over the past year:
Looks like only 85% of the BTC supply is now in profit | Source: The Glassnode Week Onchain (Week 47)
As the graph above shows, the percentage of profit offered has plummeted over the past week as the price of Bitcoin falls. Now around 15% of the total supply has been lost.
The report mentions that the 85-90% zone can be viewed as a “bull and bear transition zone”. There are two cases when the indicator enters this zone beforehand on the chart.
Related reading | Inverse Signals: Why Bitcoin Weakness Is Attributed To Dollar Strength
The first was when the Bitcoin crash happened in May and the second coincided with the El Salvador Day crash. The report finds that a value of 85% is enough to push the price of the cryptocurrency down if a higher value is not found in a reasonable period of time, similar to what is done in these cases.
At the time of writing, Bitcoin’s price is hovering around 56.8k, down 6% over the past seven days. In the last month the coin has lost 5% in value.
The following graph shows the development of the BTC price over the past five days.
BTC's price slides down in the last few days | Source: BTCUSD on TradingView
For the past week, Bitcoin has consolidated for the most part below the $ 60,000 mark. It is currently unclear when the coin will be able to rally, but when the percentage of supply on profit is taken into account, BTC could decline even further.
Featured image from Unsplash.com, charts from CryptoQuant.com, TradingView.com