Bitcoin, Bull Market Baseline 'Collapses'...Supply in Profit Falls to 61%

▲ Bitcoin (BTC), cryptocurrency decline, bear market/AI generated image

As Bitcoin (BTC) supply in profit fell to 61%, dropping below the past bull market baseline, the $80,000 resistance level emerged as a critical turning point for short-term holders' selling pressure.

According to the cryptocurrency specialized media Bitcoinist on May 26 (local time), Bitcoin's market structure is shaking under recent downward pressure, and the proportion of supply in profit has also fallen below the key bull market baseline. Bitcoinist reported that as price volatility increases, more investors are experiencing unrealized losses or nearing their purchase prices.

Darkfost, a CryptoQuant certified contributor, stated in an analysis posted on X (formerly Twitter) that the Bitcoin supply in profit has dropped to approximately 61%. He analyzed that while this figure might initially seem high, the ratio of supply in profit generally remained above 75% in past bull markets, indicating that current market momentum is weakening.

Darkfost explained that in a bear market, the proportion of supply in a loss state significantly increases. When Bitcoin fell below $60,000, the supply in profit dropped to 51.1%, nearing a balance between profit and loss. He believes that for investors to continue holding Bitcoin, the level of unrealized profit must remain sufficiently high.

However, the risk of a short-term correction can also increase when the supply in profit is excessively high. Darkfost pointed out that in extreme periods where almost all supply is in profit, the market becomes overheated and vulnerable to short-term corrections. The current decline in supply in profit is interpreted as a signal of both weakening investor confidence and increasing market uncertainty.

In terms of price, $80,000 was presented as the next key resistance level. Darkfost stated that $80,000 represents the purchase price for short-term holders and has acted as a major resistance zone since early October last year. Bitcoin attempted to break above $82,000 but was pushed back from that zone, leading to an analysis that short-term holders are more likely to exit the market to cut losses rather than continue holding.

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