On-chain data reveals more than 30% of the Bitcoin supply has entered into losses as the price of the crypto continues to decline.
Less Than 70% Of Bitcoin Entities Are Now In Profit
As per the latest weekly report from Glassnode, the percentage of BTC entities in profit has severely dropped recently as the value now oscillates between 76% and 65%.
The “percent of entities in profit” is an indicator that measures the percentage of Bitcoin investors that are currently in profit.
The metric works by looking at each coin on the chain and checking its history to see the price it last moved at. If this price is less than the current one, then the coin has accumulated some profit. On the other hand, it being bought at a higher price would imply that it’s in loss at the moment.
An “entity” here refers to a collection of addresses that are controlled by the same investor(s). So based on whether the coins held by these entities are in profit or loss, it’s possible to talk about the profit status of the entity as a whole.
Now, here is a chart that shows the trend in the Bitcoin percent of entities in profit over the past three years:
Looks like the indicator's value has sharply dropped recently | Source: The Glassnode Week Onchain - Week 8, 2022
As you can see in the above graph, the Bitcoin percentage of entities in profit has plunged down recently, and is currently below 70%. Conversely, this means that more than 30% of the entities are now in loss.
The report also notes that more than 10% of the entities bought their coins between $33k and $44k. So if the price doesn’t catch an uptrend soon, many of these will start going underwater, and some will thus also be forced to sell their coins.
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This can lead to yet more selling pressure in the Bitcoin market, and would therefore be bearish for the crypto’s outcome.
Bitcoin’s price crashed below the $37k mark early today, but has since recovered a bit. At the time of writing, the crypto’s price floats around $37.4k, down 15% in the last seven days. Over the past month, the coin has gained 3% in value.
The below chart shows the trend in the price of BTC over the last five days.
BTC's price seems to have sharply gone down over the last few days | Source: BTCUSD on TradingView
As uncertainties due to geopolitical tensions rise, investors have started exiting out of risk markets. This has resulted in a plunge in the price of Bitcoin.
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com