Bitcoin (BTC) hodlers are returning to profit as new data hints the BTC price has put in the “foundation” of a macro bottom.
The latest figures from on-chain analytics firm Glassnode shows a large swathe of the BTC supply heading “into the black” as BTC/USD passed $18,000.
Bitcoin establishes "massive" accumulation zone
After gaining nearly 5% in 24 hours, Bitcoin is back on bulls’ radar ahead of a crunch United States inflation data release.
What the impact will be remains uncertain, but on-chain analysis is eyeing a more important phenomenon already playing out on the market.
The latest price uptick has seen a considerable number of bitcoins flip from unrealized loss to unrealized profit — it is now worth more than when it last moved.
If this means that investors who bought below the current spot price are in profit, it suggests that a significant amount of the BTC supply changed hands in an area between there and recent multi-year lows.
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This in turn has implications for price performance, as those investors buying in establish formidable price support.
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“Simple Bitcoin tools like Supply in Profit return massive edge for those who pay attention,” Checkmate, Glassnode’s lead on-chain analyst, commented about the data.
“What we are looking at is a relatively small price change (~10%), but a massive 13% of all coins returning to profit. This means a foundation of massive capitulation --> accumulation.”
Bitcoin % supply in profit annotated chart. Source: Glassnode/ Twitter
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The terms “capitulation” and “accumulation” correspond to classic market cycles, notably that of Wyckoff, which calls for an accumulation period following a macro low, which should later lead to the market’s next bullish phase.
In terms of numbers, at $18,200, 13% of the circulating BTC supply had returned to profit, according to Glassnode.
“The observed sharp move upwards in this metric helps to confirm that a large volume of BTC was acquired between $16.5k and $18.2k,” the firm reiterated.
Mood echoes December highs
Bitcoin at one-month highs meanwhile provides a stark contrast to post-FTX chaos in terms of profitability.
As Cointelegraph reported, in the aftermath of the FTX meltdown, hodlers were sitting on more than half of the supply in unrealized loss.
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The picture barely improved in subsequent weeks, with Bitcoin's realized cap drawdown nearing bear market bottom territory.
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In December, at the time when BTC/USD last traded above $18,000, Philip Swift, co-founder of trading suite Decentrader, was nonetheless already eyeing a move from capitulation to accumulation.
