The latest analysis from CryptoQuant explores the ‘Supply in Profit’ indicator in the world of cryptocurrency, shedding light on market trends and investor sentiment. This analysis suggests that Bitcoin may be on the cusp of a bullish period.
The Supply in Profit indicator measures the percentage of Bitcoin currently held at a profit, indicating that the buying price is lower than the current market value. This metric becomes significant when Bitcoin’s price surpasses previous highs, pushing the indicator towards 100%. This situation implies that most holders could sell their coins for a profit, creating a positive market sentiment.
In bull markets, this indicator typically remains between 90% and 100% for extended periods, ranging from six to twelve months. This sustained high level indicates a strong market where investors are generally making profits, increasing confidence and reducing the likelihood of mass sell-offs.
CryptoQuant has introduced a unique approach by combining the ultra-long-term moving average (1,500 DMA) with ±1 standard deviation to better understand this metric over Bitcoin’s cycles, which align with its halving events every four years. Observations show that when the Supply in Profit surpasses the upper boundary of this range, it aligns with the beginning of major bull markets.
In historical cycles, there is a preliminary phase where the indicator briefly surpasses the +1 standard deviation band before entering a full bull market. For instance, the 2015-2018 cycle lasted 580 days, while the 2019-2022 cycle spanned 280 days.
Currently, we are approximately 180 days into a potential bull phase, with signs indicating that the bullish trend may continue for more than three months, especially with the recent approvals of BTC and ETH spot ETFs. These financial products are anticipated to attract significant capital inflows, further supporting a positive market outlook.
The approval of spot ETFs for Bitcoin and Ethereum marks a significant development in the cryptocurrency industry, potentially driving more institutional and retail investment. As these ETFs make it easier for a wider audience to access Bitcoin and Ethereum, the influx of new capital could sustain and accelerate the ongoing bullish trend indicated by the Supply in Profit indicator.
By analyzing historical data and current trends, CryptoQuant’s analysis provides a rational perspective on the potential continuation of the current market upswing. As the cryptocurrency market matures, tools like the Supply in Profit indicator are crucial for investors seeking to grasp the dynamics of bullish and bearish cycles in this volatile market.