Anika Begay
On-chain data reveals what percentage of the entire Bitcoin user base is still making a profit after the asset’s latest price crash.
Bitcoin has so many addresses that still maintain net gains
In a new post on X, market intelligence platform IntoTheBlock discusses the state of Bitcoin investors’ profits and losses following the cryptocurrency’s crash.
The indicator of interest here is “Historical In/Out of the Money,” which uses on-chain data to determine the percentage breakdown of addresses on the network that are making profits and losses.
This metric works by examining the transaction history of every address on the network to find the average price at which they purchased their coins. If this cost basis for any address is less than the current spot value of the asset, then it can be assumed that that particular address is holding a net unrealized profit.
Likewise, wallets of the opposite type could be considered underwater. IntoTheBlock defines the first type of addresses as “in the money”, while the second as “out of the money”.
Addresses whose base cost matches the latest price of the cryptocurrency are naturally breaking even on their investment or are “at the money”.
Here is the graph shared by the analysis company that shows the historical trend of In/Out of the Money since the beginning of the year:
Looks like the percentage of addresses carrying profits has been going down recently | Source: IntoTheBlock on X
As can be seen from the chart above, a large number of Bitcoin addresses have generally been in profit throughout the year, a result of the rally that the cryptocurrency price has experienced over this time frame.
The latest dip to the $50,000 level, however, has shaken things up, as a significant amount of investors are now at a loss. About 75% of the user base is currently in the money, equivalent to 39 million addresses.
The last time BTC saw such levels of investor profitability was in January. Interestingly, the cryptocurrency bottomed out around $39,000 when the profit-loss ratio fell to these levels.
The fact that Bitcoin bottoms out when holder profitability is low is actually something that has been observed throughout history. Profitable investors are more likely to sell their coins, so a large amount of them in the green can increase the possibility of a mass sell-off. However, conversely, their decline can reduce the risk of selling for the profit motive. This is why the asset has had an easier time recovering when profitability has fallen low enough.
Of course, 75% of the addresses in profit is not really a low value, but during bullish periods, it has been deep enough to lead to bottoming, as selling absorption demand is usually high during such periods.
Now it only remains to be seen whether the current profitability of Bitcoin will put an end to the crisis as in January, or whether there is still much to be done.
BTC Price
At the time of writing, Bitcoin is hovering around $50,100, down more than 28% from last week.
The price of the coin appears to have been sliding down over the last few days | Source: BTCUSD on TradingView
Featured image by Dall-E, IntoTheBlock.com, chart by TradingView.com
