Tag: bitcoin profit

Bitcoin Supply In Loss Hits 10% After Crash: What Happened Last Time
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On-chain data shows the Bitcoin supply in profit has plunged following the latest crash in the asset’s price towards the $65,000 level.

Bitcoin Supply In Profit Is Now Down To Around 90%

As analyst James Van Straten pointed out in a post on X, around 10% of the BTC supply is now in a state of loss. The on-chain indicator of interest here is the “Percent Supply in Profit,” which tracks the percentage of the total circulating Bitcoin supply holding an unrealized gain.

This metric works by going through the blockchain history of each coin in circulation to see the price at which it was last transferred. Assuming that this previous transaction involved a change of hands, the price at its moment would serve as the cost basis for the coin.

The coins with a cost basis that is less than the current spot price of the cryptocurrency would naturally be considered to be holding a profit, and as such, they would be counted under the supply in profit.

The Percent Supply in Profit adds up all such coins and calculates what part of the total supply they make up for. The opposite metric, the Percent Supply in Loss, adds up the coins not satisfying this condition.

Since the total circulating supply must add up to 100%, the Percent Supply in Loss can be deduced from the Percent Supply in Profit by subtracting its value from 100.

Now, here is a chart that shows the trend in the Percent Supply in Profit for Bitcoin over the last few months:
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Looks like the value of the metric has taken a plunge in recent days | Source: @jvs_btc on X
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As displayed in the above graph, the Bitcoin Percent Supply in Profit has seen a sharp drop recently as the cryptocurrency price has gone through a significant drawdown.

The indicator’s value has dropped to around the 90% mark, which means that about 10% of the supply is currently carrying a loss. The chart shows that the last time the metric touched these levels was back on 22 March. Interestingly, the asset also found its bottom around then.

Earlier, the Percent Supply In Profit had pushed towards the 100% mark, which was a natural consequence of the price setting a new all-time high (ATH), since at fresh highs, all of the supply must be out of the red.

Generally, the investors in profit are more likely to sell their coins, so if many come into gains, the possibility of a mass selloff rises. Due to this reason, high levels of the Percent Supply In Profit have often led to tops.

Similarly, bottoms become more likely when investor profitability levels drop relatively low. The current value of 90% is still quite high, but this isn’t unusual during bull runs, as there is strong demand and ATHs are being explored.

The fact that the profitability has cooled off compared to earlier levels may be constructive for the rally’s chances to see a continuation, just like it did last month.

BTC Price

At the time of writing, Bitcoin has been trading at around the $65,700 level, down more than 5% over the past week.
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The price of the asset seems to have been tumbling down over the past couple of days | Source: BTCUSD on TradingView
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Featured image from Shutterstock.com, Glassnode.com, chart from TradingView.com

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
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Keshav Verma

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April 2, 2024
What’s A Simple Strategy For Buying & Selling Bitcoin? This Analyst Answers
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An analyst has revealed a simple strategy for buying and selling Bitcoin using the historical pattern followed by two BTC on-chain indicators.

These Bitcoin On-Chain Indicators Have Followed A Specific Pattern Historically

In a post on X, CryptoQuant author Axel Adler Jr. discussed a simple strategy for timing buying and selling moves for Bitcoin. The strategy is based on the trend witnessed historically in two BTC on-chain metrics: the Net Unrealized Loss (NUL) and Net Unrealized Profit (NUP).

As their names suggest, these indicators keep track of the total amount of unrealized loss and unrealized profit that the investors are currently carrying.

These metrics work by going through the transaction history of each coin in circulation to see what price it was last transacted at. Assuming that the last transfer of each coin was the last time it changed hands, the price at its instant would act as its current cost basis.

If the previous price for any coin was less than the current spot price of the cryptocurrency, then that coin is currently carrying a profit. The NUP subtracts the two to calculate the exact unrealized gain for the coin.

Similarly, the NUL does the same for coins that have their cost basis above the latest value of the asset. These indicators then sum up this value for the entire supply and divide the sum by the current market cap.

Now, first, here is a chart shared by the analyst for the NUL that reveals a pattern that the metric has been following throughout the history of Bitcoin:
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The value of the metric seems to have been heading down in recent days | Source: @AxelAdlerJr on X
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The Bitcoin NUL appears to have historically broken above the 0.5 level when the asset’s price has traded around bear market lows. According to Axel, the indicator in this territory would be the moment to buy more.

Recently, the metric has been floating around the zero mark, meaning that there has been any unrealized loss being held by the investors. This makes sense, as the cryptocurrency has set new all-time highs (ATHs). Naturally, 100% of the supply goes into profit when an ATH is set.

Similar to the pattern in the NUL, the NUP has been above the 0.7 level during major tops in the past, suggesting that it may be a good opportunity to sell when the indicator is in this zone.
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Looks like the value of the indicator has been climbing up recently | Source: @AxelAdlerJr on X
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As is visible in the chart, the NUP has been marching up with the recent rally in Bitcoin. Still, so far, the indicator hasn’t broken above the seemingly important 0.7 level, implying that the market may not yet be in an overheated place where selling would be ideal, at least according to this strategy.

The graphs of the two indicators, though, show that neither of them flagged the exact tops or bottoms in the asset. It’s especially prominent in the data of the NUP, where the metric signaled “sell” during tops that were merely halfway through the bull run.

That said, buying during the points flagged by the NUL and then selling at the overheated NUP values would have historically been profitable. In that sense, this would indeed be a “simple” strategy for the asset.

It remains to be seen, though, whether these patterns will continue to hold in the current Bitcoin cycle as well.

BTC Price

At the time of writing, Bitcoin is trading at around $69,400, down 2% over the past 24 hours.
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The price of the asset appears to have been moving sideways recently | Source: BTCUSD on TradingView
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Featured image from Kanchanara on Unsplash.com, CryptoQuant.com, chart from TradingView.com

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
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Keshav Verma

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March 29, 2024
HODLing Rewards: Average Bitcoin Long-Term Holder Now Carries 55% Profit
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On-chain data shows the Bitcoin long-term holders (the so-called HODLers) are now carrying an unrealized profit of 55% on average.

Bitcoin Long-Term Holder NUPL Has Hit A Value Of 0.55

According to the latest weekly report from Glassnode, the profit that the BTC long-term holders are holding has gone up recently. The indicator of interest here is the “Net Unrealized Profit/Loss” (NUPL), which keeps track of the difference between the unrealized profit and loss that Bitcoin investors are carrying currently.

By “unrealized,” what’s meant here is that the profit or loss is yet to be harvested, as the investor carrying it hasn’t transferred their BTC on the blockchain yet. Once the holder would eventually move the coins, the profit/loss they were holding would then become “realized.”

In the context of the current discussion, the NUPL of only a specific segment of the market is of relevance: the long-term holders (LTHs). The LTHs are the Bitcoin holders who have been keeping their coins dormant on the network since at least 155 days ago.

These are the diamond hands of the market who are known to hold through periods of uptrends and downtrends alike, only selling when major market events take place.

“This includes periods when the market sets new ATHs, around cycle tops and bottoms, and during large shifts in market structure (e.g. Mt Gox, Halvings, and now the launch of spot ETFs),” explains the analytics firm.

Now, here is a chart that shows the trend in the Bitcoin LTH NUPL over the history of the asset:
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The value of the metric seems to have been going up in recent weeks | Source: Glassnode's The Week Onchain - Week 3, 2024
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As displayed in the above graph, the Bitcoin LTH NUPL has registered a rise in the last couple of months as the cryptocurrency’s spot price has gone through a notable surge.

“This metric reached 0.55 this week, which is meaningfully positive, and puts the average long-term investor at a 55% unrealized profit,” notes the report. Interestingly, BTC has registered some resistance around this level during the past.

As Glassnode has highlighted in the chart, the bulls encountered trouble here during August 2012, June 2016, July 2019, and August 2020. In all of these cases, the resulting top was only a local one, except for July 2019, where the recovery rally of the cycle hit a top that BTC wouldn’t surpass for a significant period of time.

Generally, investors in profit are more likely to sell their coins. The higher the gains that they hold, the stronger can be the allure of profit-taking. Thus, it’s not surprising to see that the LTHs holding significant profits has lead to selling pressure in the market during previous cycles.

The LTHs have indeed participated in some selling recently as well, as the data for their supply suggests.
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Looks like the value of the metric has seen some decline recently | Source: Glassnode's The Week Onchain - Week 3, 2024
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The Bitcoin LTH supply has now come down 75,000 BTC since the all-time high registered in November, while the opposite cohort, the short-term holders (STHs), have naturally gained some share.

“Whilst 75k BTC is a meaningful sum, it should also be viewed within the context of total LTH supply accounting for a whopping 76.3% of the circulating coin supply,” says the report.

BTC Price

Bitcoin has continued its recent sideways trend during the past day as its price currently floats around the $42,600 level.
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The price of the coin hasn't shown much volatility recently | Source: BTCUSD on TradingView
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Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
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Keshav Verma

Source link
January 17, 2024