The significance of Bitcoin's weeks-long trading range is all the more apparent with BTC price at one-month highs, says analysis.
Bitcoin (BTC) hodlers are returning to profit as new data hints the BTC price has put in the “foundation” of a macro bottom.
The latest figures from on-chain analytics firm Glassnode shows a large swathe of the BTC supply heading “into the black” as BTC/USD passed $18,000.
Bitcoin establishes "massive" accumulation zone
After gaining nearly 5% in 24 hours, Bitcoin is back on bulls’ radar ahead of a crunch United States inflation data release.
What the impact will be remains uncertain, but on-chain analysis is eyeing a more important phenomenon already playing out on the market.
The latest price uptick has seen a considerable number of bitcoins flip from unrealized loss to unrealized profit — it is now worth more than when it last moved.
If this means that investors who bought below the current spot price are in profit, it suggests that a significant amount of the BTC supply changed hands in an area between there and recent multi-year lows.
This in turn has implications for price performance, as those investors buying in establish formidable price support.
“Simple Bitcoin tools like Supply in Profit return massive edge for those who pay attention,” Checkmate, Glassnode’s lead on-chain analyst, commented about the data.
“What we are looking at is a relatively small price change (~10%), but a massive 13% of all coins returning to profit. This means a foundation of massive capitulation --> accumulation.”
The terms “capitulation” and “accumulation” correspond to classic market cycles, notably that of Wyckoff, which calls for an accumulation period following a macro low, which should later lead to the market’s next bullish phase.
In terms of numbers, at $18,200, 13% of the circulating BTC supply had returned to profit, according to Glassnode.
“The observed sharp move upwards in this metric helps to confirm that a large volume of BTC was acquired between $16.5k and $18.2k,” the firm reiterated.
Mood echoes December highs
Bitcoin at one-month highs meanwhile provides a stark contrast to post-FTX chaos in terms of profitability.
Related: Bitcoin gained 300% in year before last halving — Is 2023 different?
As Cointelegraph reported, in the aftermath of the FTX meltdown, hodlers were sitting on more than half of the supply in unrealized loss.
The picture barely improved in subsequent weeks, with Bitcoin's realized cap drawdown nearing bear market bottom territory.
In December, at the time when BTC/USD last traded above $18,000, Philip Swift, co-founder of trading suite Decentrader, was nonetheless already eyeing a move from capitulation to accumulation.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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