Bitcoin Drops to $29,200, Loses 5.9% of Supply

On-chain data shows that an additional 5.9% of the total bitcoin supply has gone into the red as the cryptocurrency’s price plummeted to $29,200 today.

Bitcoin supply shrinks to 70.4% in gains after today’s price drop

According to data from on-chain analytics firm glassnode1.11 million BTC has gone under the water with the latest asset price drop. The relevant indicator here is “percentage supply in profit”, which tells us about the percentage of the total bitcoin supply that is currently carrying some profit.

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This metric works by going through the on-chain history of each coin in circulation to see at what price it was previously transferred on the network. If this last transfer price for a coin was less than the current spot price of the asset, then that particular coin would currently have unrealized gains.

The percentage supply in profit adds up all such coins and calculates how much of the total supply they make up. An equivalent indicator called “percent supply in loss” tracks the opposite type of token, and its value can be found by simply subtracting supply in profit from 100.

Now, here is a chart showing the trend of bitcoin percent supply in gains over the past few days:

The value of the indicator seems to have taken a hit in recent hours | Source: Glassnode on Twitter

As shown in the above graph, the bitcoin percent supply was trading around 76.3% in gains yesterday when the cryptocurrency’s price was above $30,200.

However, with the previous day’s drop to $29,200, the metric has also taken a sharp hit, as only 70.4% of the total circulating supply now holds some unrealized gains.

Historically, whenever gains in supply have crossed the 75% mark, price declines have become more likely. This is because the more profit investors have, the more likely they are to sell.

The latest decline in the asset is probably due to this, as investors who were sitting on profits may have sold their coins to make a profit. Since the metric has now cooled well below the 75% mark, it’s possible it could be in for a correction.

Bitcoin had been consolidating above $30,000 for several weeks before falling to $29,200. As buying and selling occurred in this sideways trend, many investors gradually took profits at or above this level on their cost basis.

Therefore, going below this level has resulted in loss of a large part of the supply. More specifically, around 1.11 million BTC (equivalent to 5.9% of the total supply) has entered the red.

btc price

At the time of writing, bitcoin is trading around $29,100, down 4% over the past week.

BTC has seen a sharp drop during the last 24 hours | Source: BTCUSD on TradingView

Featured Image from Kanchanara on Unsplash.com, Chart from Tradingview.com, Glassnode.com