Glassnode data reveals that an additional 32.3% of the Bitcoin supply has returned to a profitable state during the 2023 market rally so far, bringing the total percentage of profitable BTC supply to around 77%.
A recent weekly report from Glassnode indicates that a total of 6.2 million BTC has moved back into the green this year. The relevant metric, “percent supply in profit,” illustrates the percentage of Bitcoin supply currently holding some amount of unrealized profit.
The metric works by examining the on-chain history of each coin in circulation and identifying the price at which it was last moved. If the previous price for any coin is lower than the current BTC value, that specific coin is considered profitable, and the indicator adds it to its value.
Higher values of the percent supply in profit typically make it more likely for investors to sell and harvest some of the gains they have accumulated. Conversely, low values suggest that a significant portion of the supply is currently at a loss, and holders have little incentive to sell their coins.
Is the BTC Bear Market Over?
During last year’s bear market, the 7-day EMA Bitcoin percent supply dropped to remarkably low levels as multiple crashes put many investors underwater. The indicator reached its lowest point following the crash caused by the FTX cryptocurrency exchange collapse, with only 44.7% of the supply (about 8.6 million BTC) remaining profitable.
However, with the rally that began this year, the metric has shown strong recovery, with about 77% of the Bitcoin supply (14.8 million BTC) now in profit. Compared to the start of the year, an additional 6.2 million BTC has entered a profitable state, representing around 32.3% of the total BTC supply. This significant increase suggests that much of the supply changed hands below the current price level.
Historically, bear market bottoms have formed when investors capitulated after entering deep losses. During such capitulation events, the supply held by underwater investors transfers to holders with stronger conviction. The recent trend in the supply in profit may indicate that such a detox has occurred, as many holders now have their cost basis at lower, bear market prices.