Supply in Profit and Loss: Reading Bitcoin's Pain and Euphoria
Alphractal Research · Apr 11, 2025 · 6 min read
Understanding how much of Bitcoin's supply is currently in profit or loss provides one of the clearest windows into market psychology. The Supply in Profit/Loss metric quantifies the percentage of all existing bitcoin that was last moved at a price lower (profit) or higher (loss) than the current spot price. Extreme readings in either direction have historically been among the most reliable signals for identifying cycle tops and bottoms.
What Is Supply in Profit/Loss?
Every bitcoin (more precisely, every Unspent Transaction Output, or UTXO) has a recorded price at which it last moved on-chain. This price serves as the cost basis for that particular unit.
- Supply in Profit: The total amount of bitcoin whose last moved price is below the current spot price
- Supply in Loss: The total amount of bitcoin whose last moved price is above the current spot price
These values are typically expressed as a percentage of total circulating supply. At any given moment, the two values sum to approximately 100% (with a small portion at exactly breakeven).
How to Interpret the Data
High Supply in Profit (> 95%)
When more than 95% of the supply is in profit, the market is in a state of broad euphoria. Nearly every holder is sitting on unrealized gains. While this feels positive, it is historically a warning signal.
The reasoning is straightforward: when almost everyone is in profit, the potential selling pressure is enormous. Any catalyst that triggers profit-taking can cascade into a significant correction because there are very few holders who need the price to go higher before they consider selling.
Key observations at extreme profit levels:
- Selling incentive is maximized across almost all holder cohorts
- New buyer pool is thin because most potential participants have already entered
- Volatility tends to increase as the market becomes fragile
Low Supply in Profit (< 50%)
When less than half the supply is in profit, the market is experiencing widespread pain. More holders are underwater than above water, which creates a different set of dynamics:
- Selling pressure diminishes because remaining holders are unwilling to realize losses
- Weak hands have already exited, leaving mostly convicted holders
- Accumulation by long-term investors tends to accelerate at these levels
Extreme Loss Zones (Supply in Profit < 40%)
These are rare events that have occurred only during the deepest bear market capitulations. Historically, they mark generational buying opportunities. When 60% or more of the supply is at a loss, the market has exhausted most of its selling pressure, and the foundation for a new cycle begins to form.
Historical Signals
Cycle Top Indicators
Every major Bitcoin cycle top has been preceded by Supply in Profit readings above 95%:
- 2013 peaks: Supply in Profit exceeded 97% before both the April and November tops
- 2017 peak: Reached approximately 98% before the $20,000 top
- 2021 peaks: Both the April ($64,000) and November ($69,000) peaks showed Supply in Profit above 95%
The critical insight is that the metric does not pinpoint the exact top but rather identifies the danger zone where a top becomes increasingly probable.
Cycle Bottom Indicators
Bear market bottoms have consistently formed when Supply in Profit dropped to 40-55%:
- 2015 bottom: Supply in Profit fell below 50% during the $200 accumulation phase
- 2018-2019 bottom: Dropped to approximately 45% during the $3,200 low
- 2022 bottom: Reached roughly 50% during the sub-$16,000 capitulation
Analyzing the Rate of Change
Beyond absolute levels, the rate of change in Supply in Profit/Loss provides valuable signals:
- Rapid increase in Supply in Profit: Price is moving up quickly past many cost basis levels, indicating a strong rally that is pulling holders into profit
- Rapid increase in Supply in Loss: Price is dropping through many cost basis levels, indicating a sharp selloff where holders are going underwater quickly
- Stagnation at extreme levels: When Supply in Profit stays above 90% for extended periods, it can indicate a mature bull market approaching exhaustion
Combining with Other On-Chain Metrics
Supply in Profit/Loss becomes even more powerful when analyzed alongside related metrics:
With MVRV Z-Score
The MVRV Z-Score provides a complementary view of the same underlying dynamic. When both metrics reach extreme readings simultaneously, the signal strength increases significantly.
With SOPR
The Spent Output Profit Ratio shows whether coins being actively spent are in profit or loss. Combining this with Supply in Profit/Loss tells you not just how much supply is in profit, but whether those profitable holders are actually selling.
With HODL Waves
HODL Waves reveal the age distribution of the supply. Knowing that 95% of supply is in profit is more actionable when you also know that much of that supply is held by long-term holders (who are less likely to sell) versus short-term holders (who are more reactive).
On the Alphractal platform, you can overlay all of these metrics on a single dashboard and use the screener to set alerts when Supply in Profit crosses critical thresholds. Alpha AI can contextualize the current reading by comparing it against historical patterns and identifying which holder cohorts are driving the changes.
Practical Applications
- Position sizing: Reduce exposure when Supply in Profit exceeds 95%; increase exposure when it drops below 50%
- Risk management: Use extreme readings as triggers to tighten stop-losses or take partial profits
- Cycle mapping: Track the metric's trajectory to estimate where you are in the broader market cycle
- Contrarian signals: The most uncomfortable moments (extreme loss readings) have historically been the most rewarding entry points
Limitations
- Lost coins are counted as either in profit or loss based on their last moved price, which may not reflect a living holder's actual position
- Exchange wallets can distort readings when large amounts are reorganized internally
- The metric is backward-looking: it tells you the current state but does not predict future price action on its own
Track Supply in Profit/Loss on Alphractal
Monitor Supply in Profit/Loss in real-time on Alphractal alongside 1,500+ other metrics. Alpha AI can provide contextual analysis of current readings and what they mean for your portfolio.
This analysis is for educational purposes only and does not constitute financial advice.