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  • Over 83% of Bitcoin’s circulating supply is now profitable, indicating a shift towards a bull market phase.
  • Long-term holders dominate Bitcoin’s market, with their supply reaching new highs while short-term holder supply hits an all-time low.

In a recent surge of market activity, Bitcoin (BTC) has shown remarkable profitability, with the majority of its circulating supply now held in profit. Glassnode, a renowned blockchain analytics firm, reports that 83.6% of Bitcoin’s total circulating supply is profitable. This figure exceeds historical averages and approaches the higher band of +1 standard deviation at 90%, indicating a significant shift in market dynamics.

Bitcoin: Percent of Supply Last Active 1+ Years Ago: Source Glassnode

This trend aligns with historical analysis, which suggests that when Bitcoin’s circulating supply in profit nears 90%, the market often enters the “early stages of a bull market’s Euphoric phase.” In such phases, the prevalence of profitable coins typically increases.

Understanding the Bear/Bull Transition Phase

The current market cycle characterizes itself as a bear/bull transition phase, with the percentage of BTC’s circulating supply in profit fluctuating between 50% and 90%. This phase has persisted for approximately ten months, recovering from the 2022 bear trend. Glassnode’s report highlights that most of 2023 traded below the all-time average, with the October rally marking the first sustained break above this average.

Despite the rise in BTC’s circulating supply in profit, the report notes that its unrealized profit remains modest. The majority of long-term holders have not been motivated to sell, even with the increase in profitability. Bitcoin’s Unrealized Profit continues to hover around the all-time mean level of 49%, considerably lower than the euphoric levels of 60%+ seen in past bull markets.

Long-Term Holders Dominate as Short-Term Holders Recede

The composition of Bitcoin holders is also evolving. Long-term holders (LTH) are increasingly dominant, holding about 15 million BTC, reaching new all-time highs since November 2022. In contrast, the supply held by short-term holders (STH) has declined to 2.3 million BTC, an all-time low.

This holding pattern is reflective of the broader sentiment in the cryptocurrency sector. As Bitcoin returned to the psychologically significant price mark of $37,500, around 85% of its holders are currently in profit. Data from blockchain analytics platform IntoTheBlock, as of November 23, confirms that 84% of Bitcoin holders are making money at the current price, while 11% are at a loss, and 5% are breaking even.

Future Outlook: Potential for Continued Growth

The percentage of Bitcoin holders in profit has historically indicated potential future gains. Analysis by PlanB, creator of the Bitcoin stock-to-flow (S2F) model, suggests that when 87% of Bitcoin holders are in profit, as was the case on November 22, further price growth can be expected.

Furthermore, Bitcoin’s price dynamics continue to evolve positively. As of the latest reports, the cryptocurrency has seen a 2.30% increase in the last 24 hours, a 0.39% gain over the previous week, and a 9.93% advance over the past month.

External factors, such as growing optimism for the approval of a spot exchange-traded fund (ETF) and the upcoming halving event, also buoy this bullish trend in Bitcoin. Moreover, the record high percentage of Bitcoin’s supply, which has remained inactive on-chain for at least a year, indicates a strong belief among holders in the cryptocurrency’s long-term value.

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