Over 90% Profit for Bitcoin Holders Post $47,000 Surge

The proportion of Bitcoin holders in profit has exceeded 90%, according to data from market intelligence platform IntoTheBlock. This surge in profitability follows Bitcoin’s rapid ascent above the $46,000 threshold. The key metric in focus is the “Historical In/Out of the Money,” illustrating the percentage of investors holding unrealized gains throughout the cryptocurrency’s history.

This metric analyzes each address’s on-chain history to determine its transactions. If an address’s average cost basis is lower than the spot price at any given point, the holder is considered in profits for that specific time frame.

Monitoring the number of investors in profits is crucial, as they are more likely to engage in selling. A high level of addresses in gains increases the likelihood of a widespread selloff. Conversely, market bottoms may be more probable when fewer hands are in profits, indicating a potential exhaustion of selling pressure.

The accompanying chart depicts the trend in the percentage of Bitcoin holders in profit over the asset’s history. Notably, the percentage has recently surged, surpassing the 90% mark, suggesting widespread gains across the majority of the market.

This uptick in Bitcoin holders’ profitability raises the possibility of a widespread profit-taking event, potentially signaling a peak in the current rally. Examining past patterns may offer insights into the potential outcomes.

With Bitcoin's swift move past $46k, over 90% of all BTC addresses are now in profit. pic.twitter.com/GGchdT0yOl

— IntoTheBlock (@intotheblock) January 9, 2024

IntoTheBlock has observed the historical behavior when Bitcoin surpasses this profit level in previous market cycles. The analytics platform notes that Bitcoin holders consistently reached this profit level multiple times in each bull cycle, including the early stages of each cycle. While reaching close to 100% profit has historically coincided with cycle tops, smaller, local tops have typically occurred first. Determining the exact phase of the current cycle remains challenging.

Bitcoin experienced a surge beyond the $47,000 level but has encountered a pullback, currently trading around $46,100. The chart below illustrates the asset’s recent performance over the past few days.