Bitcoin’s profit supply has fallen sharply recently crypto market crash. This has raised concerns that BTC could suffer a further crash as holders in the red could lose their coins.
Bitcoin Supply Drops in Profits During Market Crash
On-chain analytics platform Glassnode unveiled in a report that Bitcoin’s profit supply has historically fallen to around 85%, with 15% of the supply at a loss. This has happened as the BTC price breaks off from a new all-time high (ATH) and trades around short-term holders’ cost basis, as is happening now.
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Glassnode noted that this marks a crucial phase for Bitcoin as the market here tests the conviction of investors who had been buying close to Bitcoin. recent highlights. This pattern is said to be happening for the third time in this current cycle. The on-chain analytics platform warned that if BTC fails to recover above the $113,100 range, a deeper contraction could leave more of the Bitcoin supply in losses.
Glassnode further stated that this deeper contraction could amplify the stress under the recent developments Bitcoin buyerswhich could set the stage for a broader market-wide capitulation. The platform also alluded to the Supply Quantile Cost Basis to explain why it is essential for BTC to recover the cost basis for the short-term holders above $113,000.
Bitcoin is said to be struggling to stay above the 0.85 quantile at $108,600. The inability to hold this has historically indicated structural market weakness and has often preceded deeper corrections towards the 0.75 quantile, which is now near $97,500. This moves BTC is in danger of falling Below $100,000 for the first time since May.
A longer consolidation phase may be necessary
Glassnode stated that from a macro perspective, the repeated depletion of demand indicates that Bitcoin may need a longer period consolidation phase to rebuild strength. This depletion is said to be more evident in Long-Term Holder Spend Volume. These long-term holders have increased their spending, with the 30D-SMA increasing from the 10,000 BTC baseline to over 22,000 BTC per day since the market peak in July.
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Glassnode noted that such persistent distribution indicates profit taking from seasoned investorswhich has contributed to Bitcoin’s current weakness. Bitcoin OGs have continued to sell their coins at an unprecedented pace, putting significant selling pressure on BTC. Onchain Lens was recently unveiled that a certain whale moved 3,003 BTC to Binance, likely in an attempt to sell, while also shorting BTC with a position worth $227 million.
At the time of writing, the Bitcoin price is trading around $108,800, up in the past 24 hours, according to facts from CoinMarketCap.
Featured image from Pixabay, chart from Tradingview.com