As the cryptocurrency market continues to experience sharp fluctuations, on-chain data continues to generate critical signals for investors. Analyst James Van Straten drew attention to a metric that has successfully signaled Bitcoin bottoms in past cycles.
According to Van Straten, “buying the dip is tempting but also quite damaging.” However, those who adopt this strategy have a strong point of reference: the balance between the portion of the BTC supply that is in profit and loss.
This indicator reveals the overall stress level and investor positioning in the market by measuring how many Bitcoin wallets are profitable and how many are at a loss relative to the current market price.
According to data shared by onchain data provider Glassnode, approximately 11.1 million BTC are currently in profit, while 8.9 million BTC are in loss. The convergence of profit and loss-making supply amounts has historically coincided with the end of bear markets. Therefore, according to the analyst, this convergence is interpreted as a capitulation zone and a long-term opportunity area.
Historical examples support the importance of this metric. Points where the supply of profit and loss balances out have been recorded as definitive lows: around $15,000 after the FTX crash in November 2022, below $3,000 during the COVID-19 shock in March 2020, around $3,300 in January 2019, and slightly above $200 in 2015. During these periods, intense selling pressure was observed in the market, and long-term trend reversals began.
The current situation, where the supply of BTC that is in profit and loss is once again converging, suggests that a similar bottom formation may be on the horizon. With Bitcoin trading around $74,000, this metric is being closely watched to understand whether the overall market pressure is easing. However, analysts add that onchain indicators alone are not sufficient, and that macroeconomic conditions and liquidity dynamics remain crucial factors.
*This is not investment advice.
