Bitcoin continues to show resilience, with its supply loss dropping below 2%, indicating that holders are shifting towards profitability.

  • The loss supply of Bitcoin has fallen below 2%, while the proportion of profitable holders has risen to a cycle high of 98%.

  • If profit-taking intensifies and overheating conditions worsen, BTC may return to $96,000.

Over the past month, the price of Bitcoin [BTC] has experienced a significant rise, climbing from $76,000 to a local high of $104,000.

According to CryptoQuant data, currently 98% of BTC holders are in profit. This naturally leads to the supply loss rate dropping to a historical low of just below 2%.

The impact of widespread profitability on market sentiment

Historically, this situation aligns with early market euphoria, where the vast majority of holders are enjoying profits. As COINOTAG points out, Bitcoin's NUPL has risen continuously over the past week, reaching 0.56. This indicates that while holders are confident, they remain cautious due to expectations of further price increases.

Market dynamics: Identifying potential overconfidence

The current optimism surrounding Bitcoin may change in an instant. When the BTC supply loss drops to between 0-2%, it is typically accompanied by the late stages of a bull market. This phase often leads to overconfidence among holders as they feel more secure about their positions. Historical data shows that when NUPL reaches 0.75, market psychology enters an important phase.

At this time, the distribution risk has significantly increased, with long-term holders possibly viewing this as an opportunity to mitigate risk, while new entrants may chase profits, leading to a divergence in market sentiment.

Recent data shows that as traders' profitability improves, holders are beginning to diversify their asset allocations. Notably, the net inflow to exchanges has turned positive, with 756 BTC flowing into exchanges in the past 48 hours. This change indicates that the inflow is greater than the outflow, a trend that typically aligns with increasing selling pressure. Historical cycles indicate that positive net inflows often occur before reaching local peaks.

Historical patterns and future predictions

With the re-emergence of this familiar pattern, one can't help but ask whether Bitcoin will repeat its historical cycle and reach the peak once again. Currently, the supply loss ratio is extremely low, indicating that the market has entered a mature stage. Positive trading flows suggest potential distribution, indicating that the market may soon enter an overheated state.

If historical trends hold, Bitcoin may face a correction phase, falling below $100,000 towards $96,000. However, if the price maintains its upward momentum, BTC could first break through the resistance level of $106,000 (which has previously posed a challenge), before attempting to break the significant level of $109,000 set in January 2025.

Conclusion

As the Bitcoin market landscape evolves, understanding the impact of current profit levels is crucial. The intertwining of nostalgia and caution is evident as investors weigh their options. As future prices are set to reach important levels, discerning market signals and the psychological behavior of investors will become a top priority.