% Bitcoin Supply in Profit: A Guide for Smart Crypto Investments

Summary: This article will guide you through understanding the % Bitcoin Supply in Profit indicator, its application for making informed investment decisions in Bitcoin, crypto, and altcoins, and its limitations. We’ll emphasize the need to combine this indicator with other factors for sound investment decisions.

What is % Bitcoin Supply in Profit?

Ever wondered: “How many people are currently making profits from Bitcoin?” That’s what the % Bitcoin Supply in Profit indicator reveals! It represents the percentage of Bitcoin supply that is currently profitable, calculated based on their last purchase price. This indicator gives investors like us insights into market sentiment and helps make informed trading decisions.

You can view this indicator’s chart on Cryptoquant: https://cryptoquant.com/asset/btc/chart/network-indicator/supply-in-profit-percent?window=DAY&sma=0&ema=0&priceScale=log&metricScale=linear&chartStyle=line

For example: Let’s say Bitcoin is currently trading at $57,000, and the % Bitcoin Supply in Profit is around 75%. This means 75% of the Bitcoin purchased in previous transactions are currently profitable, while the remaining 25% are in the red.

Using % Bitcoin Supply in Profit for Investment Timing

Click Digital suggests using the % Bitcoin Supply in Profit to make investment decisions as follows:

**% Bitcoin Supply in Profit	Recommendation**
40% – 50%	Good buying opportunity
50% – 60%	Gradually buy in
80% – 90%	Gradually sell off
90% – 100%	Good selling opportunity

Example: If the % Bitcoin Supply in Profit is currently at 75%, nearing the gradual sell-off zone, you might consider selling a portion of your holdings or holding on for long-term investors.

Remember:

• Altcoins are often correlated with Bitcoin, so Bitcoin’s buying and selling timing can also be considered for altcoins.
• Good Buying Opportunity: When the indicator is low, it suggests fewer people are in profit, making them less likely to sell, making it a favorable buying time.
• Gradually Buy In: When the indicator is in this range, the market is in a slightly undervalued state, potentially a good time to gradually accumulate.
• Gradually Sell Off: When the indicator is in this range, the market is in a slightly overvalued state, potentially a good time to gradually reduce your holdings.
• Good Selling Opportunity: When the indicator is high, it suggests many people are in profit with Bitcoin and may be inclined to sell for profit, making it a favorable selling time.

However, remember that you should not rely solely on the % Bitcoin Supply in Profit for investment decisions. It is just one factor to consider.

Limitations of % Bitcoin Supply in Profit

The % Bitcoin Supply in Profit indicator is not a “magic bullet” for all investment decisions. It has certain limitations that you should be aware of:

1. Recommended Buying and Selling Zones Can Shift With Sudden Price Fluctuations

Imagine the price skyrocketing beyond the upper box limits or plummeting below the lower box limits. These drastic shifts will change the % Bitcoin Supply in Profit, affecting the recommended buying and selling zones.

Example:

**Old % Bitcoin Supply in Profit	Old Bitcoin Price	New % Bitcoin Supply in Profit	New Bitcoin Price**
Peak	99%	$70,000	99%
Average	75%	$57,000	75%
Bottom	45%	$20,000	45%

Similarly, a drastic price decline can also change the recommended zones.

Example:

**Old % Bitcoin Supply in Profit	Old Bitcoin Price	New % Bitcoin Supply in Profit	New Bitcoin Price**
Peak	99%	$70,000	99%
Average	75%	$57,000	75%
Bottom	45%	$20,000	45%

You need to monitor price changes alongside the indicator to adjust your trading actions accordingly.

2. This Indicator is Only One Factor for Evaluating the Market

It does not reflect market sentiment fully: The indicator only considers price data, not other factors like macro news, market psychology, or short-term fluctuations.

Other Factors to Consider When Investing in Bitcoin and Altcoins

Don’t rely solely on the % Bitcoin Supply in Profit for investment decisions. Consider other factors:

• Macro News: Economic, political, and social news can influence Bitcoin and altcoin prices.
• Liquidity: High liquidity signifies ease of buying and selling, making it easier to profit.
• Volume: High trading volume suggests strong market demand.
• TVL (Total Value Locked): Total value of assets locked within a DeFi ecosystem.
• Google Search Volume: Indicates the level of community interest in a project.
• User Base: Number of users using a project.
• Number of Wallets: Number of wallets created on a blockchain network.
• Stablecoin Balance on Exchanges: Shows investor confidence levels.
• Coin Balance on Exchanges: Indicates selling pressure.
• Upcoming Coin Unlock: Number of coins to be released in the future, which can influence prices.
• Traffic to Project Websites: Indicates community interest in the project.

Conclusion

The % Bitcoin Supply in Profit is a useful indicator for assessing market sentiment and making investment decisions in Bitcoin, crypto, and altcoins. However, you should not rely solely on this indicator but combine it with other factors for sound investment decisions.

Remember, investing in Bitcoin and Altcoins always carries inherent risks. Do thorough research before making any decisions.

Related Information

• CryptoQuant website: Provides free access to the % Bitcoin Supply in Profit indicator.
• Cryptocurrency exchanges: Exchanges like Binance, Coinbase, and Huobi offer various technical and fundamental analysis tools to help investors make informed decisions.
• Bitcoin: Bitcoin is a decentralized digital currency created by Satoshi Nakamoto in 2008. It uses blockchain technology to ensure secure and transparent transactions.
• Altcoin: Altcoin is a general term for any cryptocurrency other than Bitcoin. Altcoins can be created on various blockchain platforms.