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Bitcoin Supply in Profit Nears Record High, Bull Rally Expected Soon

According to CryptoQuant, a leading provider of blockchain data and analytics, the current level of supply in profit for Bitcoin (BTC) as of February 25, 2024, is 92.95%. This means that almost 93% of all BTC that have been moved (i.e., bought or sold) over the last year are in profit, meaning they were purchased at a price lower than the current market value.

This indicator, also known as the MVRV ratio, measures the average profit or loss of all coins that have been moved in a given time frame. It is calculated by dividing the market value by the realized value, which is the sum of the prices at which each coin last moved.

The MVRV ratio can be used to gauge the market sentiment and the potential for profit-taking or buying pressure. A high MVRV ratio indicates that most holders are in profit and may be tempted to sell, while a low MVRV ratio suggests that most holders are in loss and may be inclined to buy.

Comparing to the Previous Cycle

Let’s compare the current level of supply in profit to the previous cycle to understand the current state of the BTC market.

In the previous cycle, which lasted from 2015 to 2018, the share of profitable supply reached a peak of 96.13% on December 16, 2017, the same day that BTC hit its all-time high of $19,783. This was followed by a sharp decline in both the price and the MVRV ratio, as investors took profits and the market entered a bear phase.

Source: CryptoQuant

The MVRV ratio then bottomed out at 40.77% on December 15, 2018, the same day that BTC reached its lowest point of $3,122. This was followed by a gradual recovery in both the price and the MVRV ratio, as investors accumulated and the market entered a bull phase.

What to Expect Next

If BTC continues to follow historical trends, we could expect a further increase in price and the share of profitable supply to a level greater than 96%, after which investors could take profits and the price would correct before the start of the bull rally in 2024.

Source: CryptoQuant

This scenario is supported by another chart by CryptoQuant, which shows that the number of Bitcoin wallets holding between 1,000 and 10,000 coins is soaring. This indicates that large investors, also known as whales, are accumulating BTC and preparing for the next leg up.

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