32.3% Of Bitcoin Supply Has Returned To Profit In 2023
Data from Glassnode shows that an additional 32.3% of the Bitcoin supply has entered a profit state from the 2023 rally so far.
About 77% of the total Bitcoin supply is now profitable
According to Glassnode’s latest weekly report, a total of 6.2 million BTC has returned to the green this year. The relevant indicator here is the “offer to profit percentage”, which tells us what percentage of the Bitcoin supply is currently carrying some amount of unrealized profit.
The metric works by traversing the on-chain history of each coin in the circulating supply and looking at what price it last moved. If the previous price of any coin is less than the current value of BTC, then that particular coin is making a profit now and the indicator adds it to its value.
Related Reading: Bitcoin Drops Below $30,000 After Overheated Futures Market
Generally, the higher the percentage bid amount on profit, the more likely investors are to sell and reap some of the gains they have accumulated. For this reason, peaks are more likely to form as the metric value increases.
On the other hand, low indicator values imply that a large amount of supply is at a loss at the moment and therefore holders do not have much incentive to sell their coins.
Now, here’s a graph that shows the trend in Bitcoin’s 7-day exponential moving average (EMA) percentage bid to profit over the entire history of the cryptocurrency:
The 7-day EMA value of the metric seems to have surged in recent days | Source: Glassnode's The Week Onchain - Week 16, 2023
As displayed in the chart above, Bitcoin’s 7-day EMA percentage supply has dropped to very low levels during the bear market last year, as several dips have put a large number of investors underwater.
The indicator reached its lowest point after the fall due to the collapse of the FTX cryptocurrency exchange, as only 44.7% of supply (about 8.6 million BTC) remained within profit.
With the start of this year’s rally, however, the metric naturally showed a strong recovery, and a total of around 77% of the Bitcoin supply (14.8 million BTC) is now in profit.
Compared to the beginning of the year, an additional 6.2 million BTC entered a profit state, representing around 32.3% of the total BTC supply. This sharp rise suggests that a large amount of supply has changed hands below the current price level.
Historically, bear market bottoms formed when investors capitulated after going into deep losses. This is because during these capitulation events, the supply that these underwater investors previously held passes into the hands of holders with stronger conviction.
The most recent trend in profit giving may suggest that such a detox may have now occurred, as a large amount of holders now have their cost base on the lower bear market prices.
BTC price
At the time of writing, Bitcoin is trading around $29,900, up 1% over the past week.
Looks like the price of the asset has gone down during the last two days | Source: BTCUSD on TradingView
Featured image of André François McKenzie on Unsplash.com, charts by TradingView.com, Glassnode.com