On-chain data shows that an additional 5.9% of the total supply of bitcoin entered losses as the cryptocurrency fell to $29,200 today.
Bitcoin bid in earnings fell to 70.4% after today’s price drop
According to data from the on-chain analytics company glass, 1.11 million BTC sunk with the latest drop in asset value. A relevant indicator here is the “Percentage of Supply in Profit”, which tells us what percentage of the total supply of bitcoin is currently holding some profit.
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This meter works by looking at the sequential history of each coin in circulation to see the price at which it was previously quoted on the network. If the last conversion rate of any currency is lower than the current spot rate of the asset, that particular currency will carry a currently unrealized profit.
Profit percentage sums up all of these coins and calculates what part of the total supply they make up. A corresponding indicator called Bid-in-Loss Percentage tracks the opposite type of token, and its value can be found simply by subtracting Bid-in-Profit from 100.
Now, here’s a chart showing the trend in bitcoin supply to earnings over the past day or so:
The value of the indicator seems to have taken a hit in recent hours | Source: Glassnode on Twitter
As shown in the chart above, bitcoin bid-to-earnings was trading around 76.3% when the cryptocurrency was above $30,200 yesterday.
With a drop to $29,200 over the past day, though, the metric has also taken a sharp hit, as only 70.4% of the total circulating supply is holding some unrealized gains now.
Historically, whenever the offer’s profit exceeds 75%, a drop in price becomes more likely. This is because investors become more likely to sell more profits that they own.
The recent crash may have originally happened because of this, as investors who were sitting on profits may have buckled and sold their coins to cash in on their gains. Since the metric has softened below the 75% mark now, this is likely to be the correction.
Before dropping to $29,200, bitcoin had been consolidating above $30,000 for several weeks. Because the buying and selling occurred in this sideways trend, many investors slowly acquired the cost basis at or above this level.
Because of this, a drop below this level resulted in a significant loss of supply. More specifically, about 1.11 million bitcoins (equivalent to 5.9% of the total supply) entered the red.
BTC price
At the time of writing, Bitcoin was trading at around $29,100, down 4% in the past week.
BTC has seen a sharp drop during the last 24 hours | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com