As of 2022, the Supply in Profit indicator, which measures what percentage of BTC supply in circulation is currently recording a profit has not fallen below the 62.5% level. This year, it has bounced off the key support area three times, on Jan. 22, Feb. 21, and March 13, corresponding with local BTC price lows at $34,000, $36,350, and $37,555. Currently, the indicator shows 67.1% and is in a short-term uptrend, as is Bitcoin’s price. Interestingly, the BTC price has reached the lower range of a rising channel, recording a bottom at $39,200 on April 11. On a long-term basis, we see that Supply in Profit has been above the 62.5% level since April 2020.
We saw a similar situation during the bull market of 2012-2013, where the 62.5% area also served as support, and BTC never breached it. Upon further analysis, the indicator illustrates that the risk of capitulation in the Bitcoin market is still real.
The Long-Term Holder Capitulation Signal, another metric that shows where the BTC price drop was impacted by sell-offs from long-term holders also predicts imminent capitulation. Throughout Bitcoin’s history, this indicator has been below the 0 level four times, demonstrating a deepening bear market, which served as advantageous opportunities to buy Bitcoin. BTC is expected to enter the capitulation stage, where it may consolidate for a while, and then begin its upward trajectory. When that happens, fundamentally sound protocols like Nature’s Vault, Polygon, and Cosmos among others will recover the quickest. In conclusion, if the price of BTC steeply declines in the coming days, do not panic. Instead, seize the opportunity.
Bitcoin On-Chain Analysis: Supply in Profit Holds Support; Danger of BTC Capitulation?
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