Bitcoin Holders In Profit Hits 95%: Is BTC Overheating?
October 18 2024 - 12:30AM
NEWSBTC
On-chain data shows around 95% of all Bitcoin holders are in profit
following the latest bullish action that the asset’s price has
seen. Very Few Bitcoin Addresses Are Still Underwater In a new post
on X, the market intelligence platform IntoTheBlock has shared an
update on how the Bitcoin holder’s profitability is currently
looking. The analytics firm has made use of on-chain data to
determine this. IntoTheBlock has gone through the transaction
history of each address on the network to check the average price
at which it acquired its coins. Wallets with a cost basis below the
current price are assumed to carry some net unrealized profit.
Related Reading: Bitcoin Whale Transfers See Massive Spike: Sign Of
Profit-Taking? Similarly, addresses of the opposite type are
considered to be loss holders. The analytics firm terms the former
investors “in the money,” while the latter are “out of the money.”
Naturally, the wallets with their average acquisition price equal
to the latest spot price of the cryptocurrency would be just
breaking even on their investment. They would be said to be “at the
money.” Now, here is how the address distribution on the Bitcoin
network is like right now across these three categories: As is
visible above, around 95% of the existing Bitcoin holders currently
have a net profit. About 3% of the remaining are at their
break-even level, while the rest 2% are underwater. Thus, the
market distribution is currently overwhelmingly skewed towards
profit holders. The reason behind this is the recent price rally
the asset has gone through. “With 95% of Bitcoin addresses now in
profit, market sentiment is booming,” notes IntoTheBlock.
“Historically, such levels have signaled strong bullish momentum
but can also indicate a potential overextension.” Generally,
investors in profit are more likely to sell their coins at any
point, so a large amount of them being in the green can raise the
chances of a mass selloff occurring with the motive of
profit-taking. This is why a high profitability ratio can suggest
potential overheated conditions. A huge amount of addresses are in
the money right now, so it’s possible that another profit-taking
event could happen. It remains to be seen whether demand would be
enough to absorb the selling or if a top would take place for
Bitcoin. Related Reading: Bitcoin Coinbase Premium Is Negative
Despite $68,000 Rally: What It Means On a more bullish note, the
Bitcoin inflows to “accumulation addresses” have spiked recently,
as CryptoQuant community manager Maartunn has pointed out in an X
post. The accumulation addresses refer to the wallets that have no
history of selling on the network. These perennial HODLers have
just added a massive 56,700 BTC to their wallets, which could
suggest they may be starting another phase of accumulation. BTC
Price At the time of writing, Bitcoin is trading around $67,400, up
more than 11% over the past week. Featured image from Dall-E,
IntoTheBlock.com, CryptoQuant.com, chart from TradingView.com
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