On-chain data shows that Bitcoin investors are now making 121% profits on average. Here’s whether that was enough to top in the past.
Bitcoin Profitability Index is currently around 221%
In new mail On X, CryptoQuant author Axel Adler Jr discussed the latest trend in the Bitcoin Average Profitability Index. The “Average Profitability Index” is an indicator for BTC that compares the spot value of the asset with its realized price.
The “realized price” here refers to a measure of the cost basis or value of the acquisition for the average investor in the Bitcoin market. The value of this metric is determined using on-chain data, taking the last price at which each coin traded on the blockchain was transacted as the basis for the current cost.
When the Average Profitability Index is greater than 100%, it means that the spot price of the cryptocurrency is currently higher than its realized price. This trend indicates that the average investor retains a net amount of profit.
On the other hand, having the indicator below this threshold means that the BTC market as a whole is holding coins at a net unrealized loss. Of course, the fact that the index is exactly equal to 100% indicates that shareholders as a whole have reached the break-even point on their investments.
Now, here’s a chart showing the trend in Bitcoin’s average profitability index over the past decade:
As can be seen in the chart above, the Bitcoin Average Profitability Index recorded a significant increase recently as the cryptocurrency reached a new all-time high price (ATH).
The index has now reached a value of around 221%, indicating that investors are making a significant amount of gains. More specifically, BTC addresses as a whole had a net gain of 121%.
In general, the higher the dividend for shareholders, the more likely they are to fall to the lure of taking profits. The current API level is high, but it is uncertain whether it is high enough for a sell-off to become a risk.
In the chart, the analyst has identified how high the gauge was at the time of the previous highs. It appears that 2017 peaked at 460%, while 2021 reached 395%.
So far in the current cycle, the highest level the index has reached is 272%, which happened during the peak in March of this year. Given the fact that the indicator has not yet reached this level, let alone the peaks from recent sessions, it is possible that Bitcoin still has enough room to rise, before a possible top becomes reached.
Bitcoin price
At the time of writing, Bitcoin is trading at around $76,200, up more than 9% over the past week.