Bitcoin On-Chain Analysis: Profit Offer at Critical Support

In this article, we take a look at, among other things, the Bitcoin Percent Supply in Profit indicator. There are indications that the Bitcoin market may be on the verge of a capitulation.

The Bitcoin Supply in Profit indicator measures what percentage of the BTC in circulation was bought below the current market price (i.e. BTC could now be sold at a profit).

The indicator is currently hovering around the 62.5% area where there seems to be some sort of support level. Therefore, we could potentially see a bullish reversal. However, if you look at a longer time horizon, you will quickly understand why this level plays a decisive role.

Bitcoin Supply Indicator in Earnings: Trend Change or Capitulation?

In 2022, the Supply in Profit indicator did not fall below 62.5% (the red line). This year, the indicator has bounced off this level three times, most recently on January 22, 2022, February 21, 2021, and March 13, 2022. The Bitcoin price was then at $34,000, $36,350, and $37,555 (the blue lines).

The indicator currently sits at 67.1% and, like the Bitcoin price (green channel), is in an uptrend. Interestingly, the price of BTC recently touched the bottom of the ascending channel (April 11, 2022 at $39,200).

Table of Profit Supply Percentage by Glassnode

Now let’s look at a broader time horizon. Since April 2020 (blue circle), the Supply in Profit indicator has remained above the level at 62.5%.

In the bull market between 2012 and 2013, there was a similar course. At the time, the area around 62.5% also acted as support. The indicator remained above the line for almost 2 months (22 months) (May 2012-March 2014).

Table of bitcoin supply percentages in Glassnode earnings
Percentage of supply in the Glass node of the profit graph

However, after the indicator fell below the key support line, the next bear market started in 2014 and 2018. So if the 62.5% level is broken in the coming weeks, we might witness to a Bitcoin market capitulation.

Possible surrender of BTC

The previously mentioned indicator tells us that the likelihood of market participants capitulating in the Bitcoin market is very real. Another indicator that the popular market analyst @TheRealPlanC recently featured on Twitter gives us a similar scenario.

The long-term holders capitulation signal shows us the periods when a decline in the price of Bitcoin was caused by a sale of the long-term holders. Throughout the history of Bitcoin, the value of this indicator has fallen below 0 (the red zones) 4 times. During these phases, there were longer and harder bear markets, but there were also excellent buying opportunities at the same time.

Long Term Holder Capitulation Signal
Source: Twitter

PlanC explained that there is “still room to reverse the trend” but the area around the red line is getting closer. So there doesn’t have to be a big sellout. Nevertheless, this is a red flag for the market.

Another graph of a possible Bitcoin capitulation was made by the analyst @OnChainCollege published. In these, you can see the Supply P/L bands or two symmetrical charts of the 3-day moving average of BTC supply, which is in profit (green) and loss (red).

According to the analyst, the intersection of the two charts (the circles) signaled the start of the bear market’s capitulation. Currently, according to the analyst, the two charts are “still far from overlapping”, but “they are getting closer”.

Provide P/L bands
Source: Twitter

Here is our latest bitcoin analysis!


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