This Signal Of Bitcoin Market Health Is Flashing A Warning

This Signal Of Bitcoin Market Health Is Flashing A Warning
Andrew Rummer

almost 3 years ago1 min

A record number of bitcoin have climbed since the last time they changed hands, exceeding the previous peak set before the 2018 crash, according to data from ARK Investment Management and Glassnode

Because all bitcoin transactions happen on a public database – the famous blockchain – it’s possible to track trading history with more detail than for stocks. For each bitcoin trade, the identity of the purchasing wallet, the selling wallet, and the time of the deal is recorded. This means you can create charts like the one above, which shows (in green) the number of bitcoin currently worth more than the last transaction price – meaning their owners are sitting on a profit.

As ARK highlighted in a report last week, the supply of bitcoin in profit has tended to drop below the supply sitting on a loss (shown in red) before rebounds in the value of bitcoin (in purple). Equally, times – like now – with elevated supply of bitcoin in profit have often come before market sell-offs. 

“The supply of bitcoin in profit is almost at an all-time high and supply in loss is at lows not seen since late 2017,” ARK wrote. The New York-based asset manager is famously bullish on bitcoin, but – personally – I don’t see how to read this particular chart as anything other than bearish in the short term.



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