Bitcoin’s Supply in Profit Drops Below 50%: What This Means

In February, Bitcoin’s supply in profit metric fell below 50%, a threshold historically associated with significant market movements. Currently, this metric has rebounded to 60.6%, as of now.

This recent decline marks a pivotal moment in the cryptocurrency’s history, as it is reminiscent of past periods when price surges followed, particularly during cycles that saw substantial accumulation by investors. Data shows that back in January 2023, Bitcoin’s price hovered around $16,682 when profitability was similarly low at 51%. This was shortly followed by a remarkable increase of 655%, taking the price to $126,000 in 2025.

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Notably, a comparable scenario occurred in March 2020 when Bitcoin’s profitability dipped below 50% while trading at $6,500. This led to a peak of nearly $69,000 in 2021. The current figures suggest the potential for another upward trajectory.

Historically, the range of 50-60% profitability has consistently indicated phases where many holders find themselves at or near their purchase price, thereby compressing unrealized gains throughout the Bitcoin community. This compression tends to reduce the selling pressure during downward market movements.

However, this metric alone does not indicate a definitive price bottom. It signifies a region where long-term accumulation strategies have typically resulted in substantial returns, while the selling pressure from holders has diminished.

Previous cycles highlighted that Bitcoin price lows often coincided with the long-term holder net unrealized profit/loss reaching negative territory, evident in the bear markets of 2015, 2018, and 2022. Presently, the long-term holder net unrealized profit/loss stands at approximately 0.40, indicating that long-term holders are still enjoying profitability, despite the overall dip in supply profitability.

This dynamic suggests a shift in market conditions. A notable amount of Bitcoin is now controlled by institutional players and spot exchange-traded funds (ETFs), accounting for about 15.8% of the circulating supply, or 3,319,677 BTC. These entities generally adopt a longer-term investment strategy, exhibiting less sensitivity to immediate price fluctuations.

Consequently, the current compression in profitability across the Bitcoin market does not suggest the same level of forced selling pressure from long-term holders as seen in prior market cycles. This evolution may contribute to a revisit of historical accumulation zones while maintaining high profitability levels among long-term holders.

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In terms of market movements, there has been a notable decline in short-term holder flows to exchanges like Binance, which dropped to 25,000 BTC as of March 25. This represents a significant decrease from about 100,000 BTC during the early February sell-off, indicating that newer participants are less likely to react with selling amidst market volatility.

Analysts have noted that valuation models can shed light on potential stress points within the market. Metrics such as market-value to realized-value (MVRV) below 1, net unrealized profit/loss under -0.2, and a Puell Multiple around 0.35 have historically signaled times of heightened retail pressure and undervaluation.

While these indicators don’t guarantee precise market bottoms, they do outline areas where downside risks have typically been minimal compared to long-term upside potential, offering strategic insights for market positioning.

The recent changes in Bitcoin’s profitability landscape could signal an important transition, allowing investors to adopt longer-term strategies devoid of panic selling and potentially laying the groundwork for future price surges.