Has Bitcoin Reached “Euphoria” Yet? What On-Chain Data Says

Here’s what on-chain data says regarding if the latest Bitcoin rally has hit the overheated “euphoria” stage where past bull runs topped out.

In its latest weekly report, the on-chain analytics firm Glassnode has discussed about the “euphoric” BTC phase from the angle of investor profitability. Euphoria basically refers to that period of the market where the investors have started embracing greed and the rally is becoming heated.

Historically, the major rallies in the asset have attained their tops in such market conditions. To define what constitutes euphoria, Glassnode has referred to the “percent supply in profit” metric. This indicator keeps track of the percentage of the total circulating Bitcoin supply that’s currently being held at a profit.

Here is a chart that shows the trend in this indicator over the past decade:

As displayed in the above graph, the Bitcoin percent supply in profit has naturally shot up as the latest rally in the cryptocurrency has occurred and the metric’s value is now floating around the 83% mark.

The all-time mean of the metric is 74%, so the current levels are notably above this level. In the chart, the analytics firm has also marked the +1 standard deviation line for the indicator, above which the market can be thought to have entered into the early stages of the euphoria phase.

The +1 standard deviation line for the metric is around 90%, so the current profitability levels are still below the mark but are nonetheless quickly closing in the gap.

As mentioned before, these profitability levels are in terms of the supply or the coins, calculated by checking for the number of tokens that have their cost basis below the current spot price.

There is another way to gauge profitability, however, and it’s the magnitude of the profits that these coins are combined are seeing right now. This unrealized profit is naturally calculated by subtracting the cost basis of each coin from the current spot price and summing up these differences for the entire supply in profit.

“For the analysis of investor behavior, often the unrealized profit is a more critical variable as it relates back to the USD-denominated profit of investor positions,” explains Glassnode.

From the graph, it’s visible that the +1 standard deviation line for this Bitcoin indicator is still quite a distance away from the current value, meaning the coin is far from reaching the euphoric state of the bull market.

“This suggests that whilst a significant volume of the supply is in profit, most have a cost basis, which is only moderately below the current spot price,” notes the report.

Bitcoin has gone through some volatility over the past day following the news of Changpeng Zhao (CZ) stepping down as Binance’s CEO. The asset had earlier slipped below the $36,000 level but has since recovered back to $36,600.