Key Points
- The percentage of Bitcoin supply in profit has dropped to an 84.4% low.
- Bitcoin’s Age Consumed and Network Realized Profit/Loss metrics suggest no price bottom has been reached yet.
The Bitcoin supply in profit has decreased to a two-month low of 84.4%, as per the latest update from Santiment. This figure had previously reached a peak of 99.93% on 5 March.
When this ratio drops, it indicates that a larger portion of Bitcoin investors are at a loss. This usually occurs when Bitcoin’s price experiences a minor correction, leading to a sell-off from recent buyers who purchased at higher prices.
Understanding the Metrics
Santiment’s analysis of the metric’s historical performance suggests that “lower levels generally justify more bullish conditions.” This is because a low supply-in-profit ratio can be seen as a contrarian indicator. When it drops, it implies that weak or paper hands have exited the market, potentially creating space for new demand.
The Age Consumed metric of Bitcoin is another key factor to look at when determining if the coin’s price has hit its bottom. This metric monitors the movement of long-held idle coins, which is often a good indicator of local price tops and bottoms.
When this metric increases, it suggests that a substantial number of previously idle tokens are changing addresses. Conversely, a decrease indicates that long-held coins remain in wallet addresses without being traded.
Current Bitcoin Status
According to Santiment, Bitcoin’s Age Consumed has been relatively flat since 3 April. This suggests that there hasn’t been any significant movement of dormant coins, which could have indicated a local bottom.
Another key metric is Bitcoin’s Network Realized Profit/Loss (NPL). This tracks the difference between the price at which coins were last moved on the blockchain and their current market price. Historically, declines in NPL are an indicator of when an asset has reached a local bottom.
However, current data suggests that a price bottom has not been reached on the charts yet.
