Bitcoin Price: 88% of the Supply Already In Profit, Is BTC Price Bottom Already In?

As Bitcoin (BTC) continues to showcase resilience, the percentage of Bitcoin supply currently in profit stands at an impressive 88.8%. This high profitability metric has sparked discussions among market analysts about whether the BTC price has already hit its bottom or if further adjustments are necessary.

Bitcoin’s Current Market Position

Bitcoin has recently experienced a strong recovery, shooting up to $66,000 over the past weekend despite some selling pressure earlier. This recovery has positioned Bitcoin well above critical support levels, prompting speculation about its future trajectory. Investors and analysts are now closely observing the market to determine if Bitcoin can maintain this momentum or if a cooldown period is imminent.

On-Chain Data and Profitability Metrics

The on-chain data indicating that 88.8% of Bitcoin’s supply is in profit is a crucial metric for understanding market sentiment. This figure, while high, has decreased from its peak earlier in the year, suggesting a slight reduction in overall profitability but still indicating a robust market position.

Historically, such high levels of profitability have often preceded periods of consolidation or minor corrections, as some investors might choose to take profits, adding selling pressure to the market. However, the current market dynamics, supported by strong fundamentals and increasing adoption, may help sustain the price levels and mitigate significant downturns.

Market Value to Realized Value (MVRV) Ratio

The Bitcoin Market Value to Realized Value (MVRV) ratio is a critical indicator used by analysts to gauge market conditions. The MVRV ratio compares Bitcoin’s market value to its realized value, providing insights into whether Bitcoin is overvalued or undervalued. A lower MVRV ratio typically indicates a buying opportunity, suggesting that Bitcoin is undervalued relative to its historical performance.

According to crypto analyst Ali Martinez, whenever the Bitcoin MVRV Ratio dips below its 90-day average, it has historically indicated a prime buying opportunity, yielding an average gain of 67%. This pattern has emerged once more, hinting that the current market conditions might be favorable for investors looking to enter or increase their positions in Bitcoin.

Correlation with Global Liquidity Index

Ali Martinez also notes that Bitcoin’s correlation with the Global Liquidity Index, which remained strong until 2024, has now broken. This shift emphasizes the necessity for a liquidity boost before the upcoming US elections to sustain the ongoing BTC bull market. Despite the spike in fees paid to Bitcoin miners, which reached 1,258 BTC, the creation of new BTC addresses has dwindled, recording only 260,838. This decline in new addresses, combined with the recent surge in Bitcoin transaction fees primarily due to the Runes protocol, highlights the evolving market conditions that investors must navigate.

Analyst Predictions and Market Sentiment

Market analysts have mixed views on whether Bitcoin’s bottom is already in. Some believe that if Bitcoin surges to $75,000 from its current position, it could signal that the market has reached its bottom, paving the way for a sustained upward trend. Conversely, if the price falls below $58,000, it could suggest that the bottom has not yet been reached, indicating potential for further corrections.

Future Outlook and Strategic Considerations

Looking ahead, Bitcoin’s ability to sustain its current price levels and continue its upward trajectory will depend on several factors, including macroeconomic conditions, regulatory developments, and market sentiment. The upcoming US elections and potential changes in monetary policy could significantly influence market dynamics and investor behavior.

Investors should keep a close eye on on-chain metrics like the MVRV ratio and overall market liquidity to make informed decisions. The continued development of the Bitcoin network, including improvements in scalability and transaction efficiency, will also play a crucial role in supporting its long-term growth and adoption.

Conclusion

The current profitability of Bitcoin’s supply and the high MVRV ratio suggest a robust market position, with the potential for further gains. However, investors must remain vigilant and consider various market indicators and external factors that could impact Bitcoin’s future performance. As the market evolves, staying informed and strategically positioned will be key to navigating the dynamic landscape of cryptocurrency investments.