Bitcoin has been on an upward trajectory, with its recent surge to new yearly highs resulting in a substantial number of investors seeing positive returns on their investments. According to the Bitfinex Alpha report, over 83% of the total Bitcoin supply is currently held at a profit. This figure marks the highest percentage of profit since November 2021 when Bitcoin achieved its all-time high of $68,000.
While the majority of BTC holders are in a profitable position, the extent of their unrealized profits is relatively modest. Unrealized profit refers to the difference between Bitcoin’s current market value and the original purchase price. Analysts, referencing Glassnode data, reveal that approximately 16.366 million BTC, accounting for around 83.7% of the total circulating supply, is currently in profit. This percentage surpasses the all-time average of 74% and is approaching the upper limit of the +1 standard deviation band, currently around 90%. This signifies that the crypto market is exhibiting signs of strength.
Despite the high number of Bitcoin holders experiencing profit, on-chain metrics indicate a decrease in the activity of long-term holders (LTHs). This suggests that this particular cohort of investors is choosing to retain their assets rather than selling them. A significant portion of BTC’s circulating supply has remained idle for a year, serving as a symbol of the LTHs’ commitment to maintaining their positions while short-term holder (STH) supply dwindles. Approximately 70.35% of the BTC supply, equivalent to 13.65 million BTC, has not been transacted or moved in the past year. This implies that the LTH base is strengthening, and speculative trading is declining.
The increasing all-time high for Bitcoin aligns with the current state of its velocity, which stands at historically low levels of 15.78. In comparison, during the previous bear market cycle, the rate reached 80. The velocity metric indicates how frequently BTC is traded or used for transactions. As the market continues its bullish phase, Bitcoin’s velocity is expected to decline further until the leading digital asset nears its previous all-time high. This is predicted to lead to a rise in velocity, accompanied by a decrease in the amount of dormant Bitcoin.
While Bitcoin holders have currently seen positive returns on their investments, many remain hesitant to realize their profits. The latest data reveals that over 83% of the total BTC supply is held at a profit, marking the highest percentage since Bitcoin’s all-time high in November 2021. However, the unrealized profit situation is not significantly large, and on-chain metrics indicate a decline in long-term holder activity. As Bitcoin’s price continues to climb, it is expected that the velocity will rise, and the amount of dormant Bitcoin will decrease.
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