- All Bitcoin Net Unrealized Gain/Loss is currently 0.11 BTC, or $2,500.
- Earnings have been positive since Jan 13 and have been mostly negative for the last six months
- Two-thirds of Bitcoin supply is profitable, but the price is down nearly 70% from its all-time high.
no matter how you think Bitcoin As an asset, a public ledger that is a blockchain makes it a lot of fun to get a little geeky and explore the analytics behind an asset. Like it or not, we have a wealth of information through on-chain analytics that most other assets don’t have.
Today, let’s create a simple piece to evaluate Bitcoin’s unrealized gains. Simply put, what would be the profit or loss if all bitcoins were sold now? Clearly this would disrupt the market and make everyone’s net worth stupid. But hey, don’t ruin the party. It’s still a reasonably indicative metric.
Ultimately, for Bitcoin to function as a store of value, it must meet the definition of the term. In other words, protect your wealth.
Bitcoin is still mostly profitable
The first step is easy. Let’s see how much of the Bitcoin supply is profit and supply. The chart below plots this as Bitcoin’s total supply rises mechanically via a pre-determined schedule towards the eventual supply cap of 21 million coins.
The ruthless impact of a bear market is clear. In November 2022 he lost over 10 million bitcoins, with a large amount of red on the right side of the chart. Thank you Sam.
A small renaissance in 2023 has seen that number drop, with 6.6 million bitcoins now lost.
The following graph shows this in another way. It tracks the percentage of total supply in profit.
If two-thirds of the total supply is profit, we can see that Bitcoin’s total unrealized profit is likely to be a positive number. In other words, if everyone sells at the current price, that current price plus the bitcoins bought will be positive.
And yes. A profit of 0.114 BTC, or around $2,500 at current prices.
Earnings turned positive on January 13th of this year and have been negative for most of the second half of 2022. Because Bitcoin discovered the hard way how grim the situation is when money printers stop and interest rates are no longer zero. .
What does this mean?
So what does this mean? Well nothing. Sorting.
On-chain metrics are fun to play with, and some are certainly good indicators. But the chart above is really just a fancy way of looking at prices.Prices go up, profits go up. Lower prices, lower profits.
Needless to say, the market is clearly following macro news right now, essentially a leveraged bet that Fed Chairman Jerome Powell’s words are kind.
I’ve tried overlaying prices on various charts to see if there is an impact.
Nonetheless, predictive power is lacking here, but it’s an interesting way to display Bitcoin’s dynamics and gauge overall market sentiment.
The rise in the profit metric is clear even though prices are still rising since the beginning of the year. size below bull market level. It remains to be seen whether the market will continue to bet on the Fed’s rate of easing, or if inflation and job numbers will be the reason for its hesitant exit.
It’s a macro world and Bitcoin just lives in it. Let’s wait for more on-chain works. Let’s dig a little deeper into this relationship.