Bitcoin Supply in Profit Tops 85%—Are We Nearing Market Euphoria?

Bitcoin holders are swimming in unrealized gains as the ’supply in profit’ metric surges past 85%—a level historically linked to overheated markets. The last time this happened? Right before the 2021 bull run peaked.

Warning signs or rocket fuel? Bulls argue this reflects institutional adoption and ETF inflows. Bears whisper about leverage ratios hitting dangerous territory—again.

Meanwhile, Wall Street analysts suddenly ’discover’ Bitcoin... just as their clients start FOMO-ing in. How predictably on-brand.

Bitcoin Supply in Profit Nears Euphoria Levels

CryptoQuant analyst Darkfost shared a recent outlook on Bitcoin’s on-chain dynamics, emphasizing the behavior of the “supply in profit” metric.

According to the analyst, the supply in profit, meaning the percentage of Bitcoin in circulation currently valued higher than its purchase price, has climbed back above 85%. This metric fell to around 75% during the last correction but has now recovered in line with the recent price rebound.

Historically, supply in profit levels above 90% have coincided with euphoric phases in past market cycles. While this level has yet to be reached in the current cycle, the upward trajectory suggests it may be approaching.

Darkfost noted that such phases often trigger accelerated price rallies, but also tend to precede short- to mid-term pullbacks. The analyst emphasized how far sentiment has shifted from recent lows:

It’s also worth noting that during past cycles, the lowest supply in profit levels were around 45–50%, which corresponded to deep bear market conditions.

Notably, in this context, monitoring this metric may be important for anticipating potential trend reversals or periods of elevated volatility.

Leverage Ratio and RSI Indicate Reduced Market Aggression

In a separate post, another CryptoQuant analyst, Crypto Lion, addressed the behavior of the leverage ratio in combination with relative strength index (RSI) data.

The analyst referenced a custom metric developed by CryptoQuant that multiplies RSI by an open interest-to-reserve ratio. This approach is designed to assess speculative positioning across the market.

Crypto Lion observed that RSI swings are currently higher than they were during the 2021 summer period, though leverage dynamics suggest that the market is not currently as overheated.

According to the post, the market appears to be slowly decoupling from aggressive leverage, potentially signaling a shift toward more organic spot-driven movement. The analyst concluded:

I am concerned about what will happen after the next high, whether the original indicator was declining or not, which is not surprising.

Featured image created with DALL-E, Chart from TradingView