April 25, 2024

On-Chain Analysis of Bitcoin: Profit Supply Gets Holds on to Support. Is There a Danger as Bitcoin Pullback?

The indicator that monitors Supply in Profit is one that takes a measurement of the percentage of Bitcoin in global circulation that is responsible for actual profits on the blockchain. That is to say, this indicator is a determinant of the percentage of available coins which have a price lower than what is presently obtainable at the moment when the latest move was made.

Whereas the current price of Bitcoin holds at the 62.5% support level, it is equally possible that this might be a sign of the trend of a bullish reversal. The risk of a pullback is equally listed in the indicator for holders in the long term.

Profit Supply Indicator is Defending Support Level

So far this year, the Profit Supply Indicator has not dropped under the 62.5% red line level. This year alone, the indicator has moved away from the major area of support up to three times. First on the 22nd of January, again on the 21st of February, and finally on the 13th of March, which corresponds with the local prices of Bitcoin at $34,000, $36,350, and $37,555.

As it is, the indicator is showing 67.1% and also in an uptrend in the short-term, same as the price of Bitcoin. Interestingly, the price of Bitcoin has got to the rising channel’s lower range as it recorded a bottom of $39,200 on the 11th of April.

The Profit Supply on a long-term basis has been seen above the 62.5% area as far back as April 2020. A similar scenario was also seen in the course of the bull market between 2012 and 2013 where 62.5% was equally another line of support. In the same year, the Profit Support did not, by any means, fall beneath the red line which was close to two months, from May 2012 to March 2014.

Nevertheless, losing that major level of support led to a deeper bearish market in 2014 and 2018. Then, if, by any means, the 62.5% support level will get broken within the following weeks, a pullback could be expected in the Bitcoin market.

Possible Market Pullback

After more analysis, the indicator reveals that the risk of having a pullback in the Bitcoin market is strong in the air. The data recently published by the popular cryptocurrency market analytic platform, TheRealPlanC, confirmed this expectation. 

Throughout the history of Bitcoin, the indicator has gone under the level of 0 only four times, which showed a deepening bearish market trend, and it was an opportunity for buying bitcoin.

In PlanC’s analysis, there is still an opportunity for the trend to be turned around but the area of the red line is closer. 

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