Bitcoin Supply In Profit Hits Historical Threshold – Echoing Past Patterns

Bitcoin is currently consolidating within a narrow range, trading below the $115,000 level while holding key support above $110,000. This consolidation reflects the ongoing tug-of-war between bulls and bears, as volatility continues to push the market in both directions. Despite the temporary stability, recent price action shows that selling pressure has gained a slight edge, leaving traders cautious about the next major move.

Top analyst Darkfost has highlighted an important on-chain development that adds context to this phase. According to his data, the percentage of Bitcoin supply in profit has now reached a historically critical threshold. This metric, which tracks how much of the circulating supply is currently above its cost basis, has long been a key guidepost for identifying major phases of the cycle. While a large share of supply in profit is not inherently bearish, history shows that such levels often coincide with pivotal turning points in Bitcoin’s market structure.

With BTC consolidating in this crucial zone and profit supply peaking, the market stands at a delicate moment. Whether Bitcoin can reclaim momentum above $115K or faces a deeper correction may depend on how investors react to this latest signal.

According to top analyst Darkfost, the current level of Bitcoin supply in profit carries far more nuance than many assume. While some investors interpret a large share of coins in profit as a bearish warning, Darkfost emphasizes that it is, in fact, a necessary component of Bitcoin’s cyclical behavior. Contrary to what many might think, he explains, “a high percentage of supply in profit is what fuels the euphoric waves that drive the market forward.”

Looking at history, the long-term average of supply in profit sits at roughly 75%, defined by a bell curve of Bitcoin’s performance since inception. In other words, across cycles, three-quarters of supply tends to sit in profit at any given time. When this ratio climbs above 90%, it usually signals a period of strong bullish momentum — the kind often seen in major bull markets. Such elevated levels create the psychological backdrop for rallies to extend, as confidence builds and capital flows into the market.

However, Darkfost also warns that this metric can signal turning points. Once the percentage of supply in profit drops back below 90%, the market often transitions into corrective phases. These can be short-lived pullbacks or prolonged downturns, but historically, the break beneath that line has marked the shift away from euphoria.

Bitcoin’s position near this threshold highlights the stakes. If supply in profit remains elevated, the market could continue its upward march. If not, the risk of a deeper correction grows, reinforcing the importance of this metric as a cycle-defining indicator.

Bitcoin is trading near $112,900 after a rebound from lows around $110,800, yet the chart shows that momentum remains fragile. Following the rejection at $123,000 earlier this month, BTC entered a corrective phase, slipping below both the 50-day and 100-day moving averages, which now act as resistance near $115,700–$116,600. This area stands out as the immediate barrier for bulls to reclaim if they want to shift the trend back in their favor.

The 200-day moving average at $111,600 is currently providing a layer of support, helping BTC stabilize after recent volatility. Holding this zone will be crucial in preventing a deeper retrace toward the $108,000 region. If buyers can defend this level while building momentum, the market could stage a relief rally back toward the mid-$115K range.

However, failure to reclaim the moving averages would leave BTC vulnerable to extended downside pressure. The inability to hold above $115K has already signaled fading strength, and without a decisive breakout, sellers could regain control. For now, Bitcoin sits in a consolidation phase, caught between critical support and resistance, with the next move likely to determine whether the market stabilizes or slides further.

Featured image from Dall-E, chart from TradingView