- Bitcoin’s “supply in profit” metric surpasses 85%, nearing historical euphoria levels.
- Blockchain activity and rising open interest signal bullish momentum amid mixed technicals.
- Negative demand momentum and short-term dominance raise concerns of a potential market top.
Bitcoin has surged to levels not seen in recent months, with over 85% of all holders currently sitting in profit a condition historically linked to the late stages of bull market cycles.
On-chain data from the CryptoQuant shows that, among the Bitcoin holders, the “Supply in profit” a measure of how many profit from their possessions has grown back up to 85% from a dip to 75% in that last correction. This surge shows the power of the current bullish trend but analysts say that the market may be edging close to an euphoric state.
Bitcoin Consolidates Amid Mixed Market Signals
Darkfost of CryptoQuant noted that having large parts of supply in profit is not a bad thing. “At once, it supports bullish trends until reaching euphoric levels.” As the 90% threshold is crossed, that level is historical data according to historical data to generally bust once there, leading to sharp pullbacks.
Currently, Bitcoin is in an area of consolidation between $94,000 and $95,000, with resistance coming in near $98,000 and support at $85,000 to $87,000. Market is moving between momentum and caution as per Technical indicators.
The Stochastic RSI shows weakness in trend strength, but the Relative Strength Index is close to overbought at 67. However, momentum and MACD readings are still bullish. Rising blockchain activity adds further to the mixed signals.
IntoTheBlock data shows that Bitcoin active addresses the number of daily addresses actively mining for transactions is approaching 800,000, a level that usually signals higher network participation. As it is, this falls well short of the 1.2 million address activity in 2021 from 2017 reflecting that retail activity in Cryptoverse still remains tepid.
Bitcoin Options Reflect Bullish Market Sentiment Shift
Meanwhile, the derivatives market is heating up with a belief in being able to speculate on just about anything. According to data from Coinglass, the open interest for the BTC increased by $1 billion between April 28 and April 30, as well as for Ethereum, which also had $150 million increase. Though there has been this uptick in activity, implied volatility in Bitcoin’s 7-day IV dipped from 53% to 38% and its 30-day IV is 43%.
The fact this drop occurred suggests a cooling market, but options trading continues to be quite bullish. 73% of BTC options premiums on Derive.xyz are being put to use in call positions with a C to P ratio of 3:1. In fact, Ethereum traders demonstrate an aggressive 81.8% bias in favour of call options.
Bitcoin’s otherwise positive vibe is tempered by its very negative 30 day Demand Momentum. Crazzyblockk from CryptoQuant says a currently of -483,860 BTC indicates that the metric is in late cycle distribution.
The pattern indicates the rally might be being driven by short term traders and a dynamic that has preceded sharp corrections (like in mid 2021 and Q2 2022). Crazzyblockk warned that this level of negative demand momentum tends to be common in overheated markets. “This shows that the long term investors may not have conviction.”
While institutional flows provide strong structural support, retail participation is absent and behavioral indicators are cautious, thus Bitcoin may not be able to rally beyond $100,000 without a consolidation period.
All the eyes are on the supply-in-profit metric until signs are clearer for the market. If exceeds 90%, it can be the lead into the euphoric phase one that then might send Bitcoin to new highs or the lengthy feared cycle high correction.
