59% of Bitcoin holders are profitable as the coin trades above the current realized price, which is the cost basis of the average BTC holder, IntoTheblock data from Jan. 19 shows.
parallel in chain currents show that the realized price of Bitcoin is around $19,700. Comparing this number to the spot price of BTC currently at over $20,700, means that 59% of coin holders are making a profit, a net benefit to the ecosystem.
This development is a shot of energy for HODLers, considering the sharp price contraction in recent months. BTC then plummeted from around $69,000 in November 2021 to just over $15,000 in 2022.
Bitcoin Price Chart Chart | Source: BTCUSDT on TradingView.com
On-chain data is processed in real time and interpreted by analysts to gauge the state of the market. Your interpretation, in turn, could greatly influence sentiment and determine how retail traders act based on price action.
Related Reading: Bitcoin Price: Investors Predict A 12% Decline For BTC In The Next Two Weeks
As BTC prices react from the $21,600 posted earlier this week, on-chain stats show more than half of BTC holders are in the green. Only 38% of market participants are out of the money.
Bitcoin in the money headlines: Source: IntoTheblock
Most Bitcoin Holders Have Been In The Red
Even as BTC appears to be recovering, there needs to be a comprehensive breakout to solidify and revive demand. Based on recent Bitcoin price action, most headlines appear to be in the green after an extended period of losses.
Bitcoin Realized Price: Source: Cryptoquant.com
Trackers show that headlines have been losing territory since mid-August 2022. The situation only worsened in the months that followed as fear, uncertainty and doubt (FUD) swept through the cryptocurrency and BTC markets, forcing to the currency to go down even more. This reduction was due to the unexpected collapse of FTX, a cryptocurrency exchange, and Alameda Research, a trading firm closely associated with the Sam Bankman-Fried exchange.
As of early November, BTC was down more than 65% from the 2021 peaks, highlighting the level of apprehension across the board, pushing the realized price even lower.
Realized price vs. market price
Realized price is a metric that measures the price of all BTC currently in supply at the price at which they were purchased. The value obtained is then divided by the BTC in the circulating supply.
The result gives an “average cost basis” which is then used to describe the realized price. It is different from the spot market price because the latter indicates the current price of Bitcoin based on real-time supply and demand. Like any other asset, BTC prices are largely determined by market forces, with the element “hype,” describing sentiment, another factor to consider.
Related Reading: Overbought or Ready to Rip? Bitcoin Daily RSI Hits Explosive Levels
It is important that more than half of Bitcoin holders are profitable at spot rates. The realized price helps judge the general economic state of the Bitcoin market. The way this metric fluctuates against the market price indicates whether BTC holders are bullish or anxious. In technical analysis, the Realized Price can be used to mark resistance or support levels.
Technically, whenever the realized price exceeds the market price, it indicates that some BTC holders are making a profit. If it falls below the market price, then collectively a section of the market participants is in the red. Profitability depends on the price level they bought.
Featured Image from Flickr, Charts from TradingView.com
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