The recent correction in the cryptocurrency market, with Bitcoin’s price dropping to $25,000, has had a significant impact on the supply dynamics and investor sentiment. One way to assess this impact is by examining the volume of supply that transitioned from being ‘in-loss’ to ‘in-profit’ during this correction.
Over 2.47M BTC Moved Into Profitable Position
According to available data, approximately 2.47 million BTC, equivalent to 12.7% of the total supply, moved into a profitable position. Bitcoin is currently trading at $31,300 levels after XRP is ruled to have won the case against SEC yesterday.
This shift in supply status is significant as it indicates a substantial number of investors who were previously holding Bitcoin at a loss have now regained profitability. Such a transition can have a positive psychological effect on market participants, potentially boosting confidence and encouraging them to hold their positions or even add to them.
Supply Held In-Loss Decreased
On the other hand, the supply held ‘in-loss’ has decreased to just 4.79 million BTC, reaching levels comparable to previous periods of market correction and consolidation. In July 2021, when Bitcoin was priced around $30,000, a similar amount of supply was in a loss position. Looking further back, we see similar levels in July 2020 ($9,200), April 2016 ($6,500), and even as far back as March 2016 ($425).
These historical comparisons highlight that the recent correction has led to a substantial reduction in the number of Bitcoin holders experiencing losses. It also suggests that previous market bottoms have acted as crucial support levels for Bitcoin, attracting buyers and potentially setting the stage for subsequent price recoveries.
Implications
Overall, the transition of supply from ‘in-loss’ to ‘in-profit’ and the decline in ‘in-loss’ supply levels indicate a potentially positive shift in market sentiment. However, it’s important to consider other factors such as market fundamentals, investor behavior, and external events that can influence cryptocurrency prices.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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Source: https://nulltx.com/bitcoin-volume-of-supply-in-loss-transitioned-to-profitable-position/