Bitcoin on-chain profitability surges above 85%: rally or euphoria?
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Bitcoin continues to rebound following the early-April pullback, now trading above the $94,000 threshold, though it remains approximately 12.7% below its January all-time high. As market participants fix their attention on the psychological resistance near $100,000, on-chain data reveals a potentially pivotal development: a sharp increase in the proportion of the circulating Bitcoin supply currently in profit, an indicator historically linked to cyclical euphoria and elevated volatility.
The metric, known as “supply in profit,” tracks the percentage of Bitcoin whose market value exceeds its acquisition cost. This figure, which had declined to around 75% during the most recent correction, has since rebounded to exceed 85%, according to data shared by CryptoQuant analyst Darkfost. Historically, this threshold has served as a prelude to more aggressive market rallies, but also as a warning signal: in past cycles, when supply in profit surpassed 90%, it often coincided with the peak of euphoric sentiment and preceded significant short- to medium-term corrections.
Sentiment has shifted notably from the recent local bottom, where the metric approached the 50% range—a level typically associated with capitulation zones in bear market conditions. While the current profitability structure supports bullish continuation in the near term, the upward trajectory raises questions about positioning sustainability and potential trend reversals should profit-taking accelerate.
The analysis of speculative leverage adds a second layer of insight. In a separate commentary, CryptoQuant analyst Crypto Lion reviewed a proprietary metric combining the Relative Strength Index (RSI) with the open interest-to-reserve ratio, designed to capture speculative aggression in derivative markets. According to the analyst, RSI amplitude has increased notably compared to the 2021 summer rally, but the broader leverage structure appears more subdued.
This decoupling suggests a market increasingly driven by spot demand rather than leverage-fueled speculation, potentially making current price action more sustainable. However, Crypto Lion expressed caution regarding what may unfold after the next local high—particularly if the indicator begins to decline, which in previous cycles has often marked the start of a broader correction phase.
In conclusion, Bitcoin’s short-term trajectory is currently supported by robust on-chain profitability and moderated leverage exposure. Yet, as the market edges closer to historical euphoria zones—particularly with supply in profit nearing the 90% level—investors should remain alert to potential inflection points. Key metrics to monitor include profit concentration, positioning in the derivatives market, and behavioral shifts in large holders, all of which could signal either a continuation of the uptrend or the onset of volatility and profit-taking dynamics.
The metric, known as “supply in profit,” tracks the percentage of Bitcoin whose market value exceeds its acquisition cost. This figure, which had declined to around 75% during the most recent correction, has since rebounded to exceed 85%, according to data shared by CryptoQuant analyst Darkfost. Historically, this threshold has served as a prelude to more aggressive market rallies, but also as a warning signal: in past cycles, when supply in profit surpassed 90%, it often coincided with the peak of euphoric sentiment and preceded significant short- to medium-term corrections.
Sentiment has shifted notably from the recent local bottom, where the metric approached the 50% range—a level typically associated with capitulation zones in bear market conditions. While the current profitability structure supports bullish continuation in the near term, the upward trajectory raises questions about positioning sustainability and potential trend reversals should profit-taking accelerate.
The analysis of speculative leverage adds a second layer of insight. In a separate commentary, CryptoQuant analyst Crypto Lion reviewed a proprietary metric combining the Relative Strength Index (RSI) with the open interest-to-reserve ratio, designed to capture speculative aggression in derivative markets. According to the analyst, RSI amplitude has increased notably compared to the 2021 summer rally, but the broader leverage structure appears more subdued.
This decoupling suggests a market increasingly driven by spot demand rather than leverage-fueled speculation, potentially making current price action more sustainable. However, Crypto Lion expressed caution regarding what may unfold after the next local high—particularly if the indicator begins to decline, which in previous cycles has often marked the start of a broader correction phase.
In conclusion, Bitcoin’s short-term trajectory is currently supported by robust on-chain profitability and moderated leverage exposure. Yet, as the market edges closer to historical euphoria zones—particularly with supply in profit nearing the 90% level—investors should remain alert to potential inflection points. Key metrics to monitor include profit concentration, positioning in the derivatives market, and behavioral shifts in large holders, all of which could signal either a continuation of the uptrend or the onset of volatility and profit-taking dynamics.