The ‘Supply in Profit’ indicator in the crypto market provides valuable insights into market trends and investor sentiment. CryptoQuant’s latest analysis explores this indicator and uncovers patterns that suggest we may be entering a bullish period for Bitcoin.
Understanding the Supply in Profit Indicator
The Supply in Profit indicator measures the percentage of Bitcoin currently held at a profit, meaning the price at which the coins were purchased is lower than the current market price.
This metric becomes particularly important when Bitcoin’s price surpasses previous highs, pushing the indicator towards 100%. In this scenario, the majority of holders can sell their coins for a profit, creating a positive market sentiment.
During bull markets, it is common for this indicator to remain between 90% and 100% for extended periods of six to twelve months. This sustained high level indicates a strong market where investors are generally making profits, boosting confidence and reducing the likelihood of mass sell-offs.
CryptoQuant’s Innovative Approach
CryptoQuant has introduced a new approach by incorporating the ultra-long-term moving average (1,500 DMA) with ±1 standard deviation to better understand this indicator throughout Bitcoin’s cycles, which roughly align with its four-year halving events. Observations show that when the Supply in Profit exceeds the upper boundary of this range, it consistently aligns with the start of major bull markets.
Historically, there is a precursor phase where the indicator briefly surpasses the +1 standard deviation band before fully entering a bull market. For example, the 2015-2018 cycle lasted 580 days, and the 2019-2022 cycle spanned 280 days.
Current Analysis and Outlook
Currently, we are approximately 180 days into a potential bull phase, and the pattern suggests that the bullish trend may extend well beyond three months, especially considering the recent approvals of BTC and ETH spot ETFs. These financial products are expected to attract significant capital inflows, further supporting a bullish outlook.
How Much Upside Potential Remains?
“From the last two cycles, we can see that the bullish trend lasted approximately 300-600 days. If we observe a similar pattern in the current cycle, we can expect the upward momentum to continue for at least another three months.” – By…
The Role of ETF Approvals
The approval of spot ETFs for Bitcoin and Ethereum is a significant development in the cryptocurrency sector, potentially encouraging more institutional and retail investment. These ETFs make it easier for a wider audience to access Bitcoin and Ethereum, and the influx of new capital could sustain and even accelerate the ongoing bullish trend indicated by the Supply in Profit indicator.
CryptoQuant’s analysis, combining historical data with current trends, provides a well-reasoned perspective on the potential continuation of the current market upswing. As the cryptocurrency market continues to mature, tools like the Supply in Profit indicator are essential for investors seeking to understand the dynamics of bull and bear cycles in this volatile market.
