Bitcoin issued a supply profitability signal for the first time since January 2023 after a rebound following deep 40% drops, and historical comparisons pointed to stronger results across all four timeframes.
Glassnode said that the supply profitability transition (Supply Profitability Crossing) was triggered when the portion of Bitcoin in profit surpassed the profit share of long-term holders again. The indicator is used to track recoveries after bear periods.
This was the first trigger since January 2023 observed after a deep drop of more than 40%. Long-term holders refer to the investor cohort that keeps Bitcoin without moving it for an extended period. The signal compares the profitability ratio of the total Bitcoin supply against the share of this group that is in profit.
Bitcoin signals were associated with higher returns in the past
In 16 out of the 17 completed events, the median return after the signal exceeded the median performance across all days. The median value reduces the impact of extreme outcomes. Returns after the signal were 12% at 1 month, 22% at 3 months, 47% at 6 months, and 127% at 1 year. In the same timeframes, the median returns across all days remained at 2%, 6%, 23%, and 63%, respectively. Even in indexed price paths, the median line after the transition stayed above the overall median around day 365, reaching approximately the 280 level.
Glassnode also compared the signal with a control group made up of similar periods in terms of drawdown depth and supply profitability. The signal outperformed in all four timeframes: 8.3% vs. 1.3% after 1 month, 19.1% vs. 6.5% after 3 months, 38.5% vs. 26.6% after 6 months, and 122.8% vs. 99% after 1 year.
Past median returns do not guarantee that the same performance will repeat in the future; the signal alone does not provide certain confirmation of an upside.
Stay tuned for the latest developments…!
