- On-chain profit metrics accelerate as bitcoin price rises
- Net profit has been positive for 17 days, the longest streak in a year
- 74% of bitcoin supply is up, three months after it fell below 50% after FTX crash sent bitcoin price down to $15,000
- Volatility Rises But It’s Thin Liquidity That’s Really Helping To Drive Bitcoin
- It’s been a good quarter for investors, but woes remain, writes our analyst
Bitcoin 2022 was an unforgettable year for all the wrong reasons, with price drops coinciding with several ugly scandals that rocked the cryptocurrency market at large.
Thus far this year, though, it’s bouncing back. Up 71% as we close out Q1, it is trading north of $28,000 for the first time since June 2022.
Looking at on-chain metrics, the positive sentiment is evident.
Net profit at one year high
The net gain of all coins, i.e. the difference between the price at which a coin moved and the price it last moved at, is at its longest positive run since this time in March 2022 last year.
Net realized profit has been positive for seventeen days now. In other words, coins are trading at a higher price than the price they were bought at (or the price they last went at).
There was an 18-day positive streak in late March/early April last year, and beyond that, we need to go back to Q4 2021, when bitcoin was trading at all-time highs. 
Granted, the size of the gains over the past two weeks haven’t been as large as what we’ve seen in previous periods, but the fact that this is one year after bitcoin has had a positive run is noteworthy.
three quarters of the supply is in profit
Another way of looking at how much things have changed is that three-quarters of the total supply is currently in profit.
just before christmas, i informed of When this figure fell below 50%, the first time since the brief flash crash at the start of COVID in March 2020 when financial markets went bananas, most of the bitcoin supply was running at a loss.
Three months later, the picture is much brighter, with 74% of the total supply in profit.
Liquidity remains low as stablecoins flee the exchanges
Interestingly, this increase in prices and profit positions is happening at a time when there is very little liquidity in the market.
In a deep dive yesterday, I compiled a Analysis Showing that stablecoin balances on the exchange have fallen by 45% over the past four months and are currently the lowest since October 2021.
Perhaps this is not a coincidence. Markets are very thin right now, and bitcoin, which is volatile at the best of times, has found it easier to move aggressively as a result. It also helps explain why it has outperformed the stock market so much, despite its recent strong correlation with it (though some believers argue that it’s banking failures that are pushing people toward bitcoin). is, but it seems like a reach).
On the other hand, bitcoin is going to be bitcoin, and when viewed historically its recent volatility is nothing to write home about, even if it picked up compared to what followed a relatively calm period. ftx collapse,
To cap it off, it’s been a great few months for bitcoin to start the year, which is a welcome respite for investors who got completely battered last year. On-chain profit metrics have corrected as sentiment improves and prices bounce back.
But there’s also low liquidity that’s helping drive it, while the broader economy presents a lot of uncertainty. Sure, it’s a great start, but it’s not out of the woods yet.