Transcription
Hey everyone, and thanks for jumping back into the cryptoverse. Today, we're going to talk about Bitcoin, and we're going to be looking at an indicator that gives us an aesthetically pleasing way to view the market cycles.
If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and also check out Into the Cryptoverse Premium at into the cryptoverse.com. Let's go ahead and jump in.
So, the price chart for Bitcoin obviously looks like this. And you can see the different market cycles that Bitcoin has had. But one of the things that can be difficult, uh, for a lot of people is identifying the lows. Now, we know if you've been here for a while, right, we know that a lot of the major lows for Bitcoin have occurred near the end of midterm years, or in the case of 2014, 2015, at the very beginning of the pre-halving year, or the beginning of the pre-election year, but generally speaking, about every four years or so.
One of the interesting charts that we can look at, which I think is a great and simple chart for navigating the Bitcoin market cycles, is simply the Bitcoin percentage of supply in profit and loss. So, basically, it just shows you what percentage of the supply is being held in profit, what percentage is being held in loss.
Now, one of the interesting things is just how cyclical the chart is. We go through periods where the amount in loss trends towards zero because every time we start hitting all-time highs, basically everyone who has bought before then is in profit. And then once we've been up at the extremes for a while, we then tend to come back down. What you'll notice is that this is a great chart for identifying bottoms. It's not necessarily a great chart for identifying tops.
One of the reasons for that is because when we are in bull markets and we start setting new highs, we can continue to set new highs for months, if not years. And you can see that this cycle has been no different. But one of the things about Bitcoin is that it does tend to reset in the midterm year. And so, of course, right now, there's all this talk about super cycles and and whatnot. And a lot of the reason for that is because a lot of people bought altcoins this cycle instead of Bitcoin, and they feel like the market owes them something, right? They they feel that something like that has to eventually happen.
Now, ultimately, that is a different topic, but when I just look at the Bitcoin chart, and I'm not cherry-picking individual alts because any year, any individual alt can go to a new all-time high. We've already seen that, uh, this year with a few altcoins. It always happens. But when you look at Bitcoin through the market cycles, you will notice that the supply and profit and loss when it converges tends to occur around the time of the bottom.
Now, I'm not suggesting that you need to sit here to try to time it perfectly, but this is a chart we followed throughout 2022, and I think it makes sense to follow it again in 2026. You'll notice that in 2022, once these charts converged, that's ultimately where the bottom was. In 2018, when these charts converged, that is where the bottom was. And the same thing in 2014, 2015. So, and again, also back over here in 2011. So, what's interesting is when the chart converges, it tends to be a low. Even in 2020, March of 2020, you can see that when they converged, that was in fact the bottom.
Right now, the percentage of Bitcoin supply in profit is about 74.3%. Making the supply and loss approximately 25.7%. So, essentially, 25% of the amount of Bitcoin that people have been buying is currently sitting at a loss from where their entry was. Of course, 74% is sitting in profit.
Now, usually, where this bottoms, right, where does it normally bottom? If you look at the percentage of supply in profit historically, it has bottomed somewhere between around, let's call it 36% up to about 45%. So, let's just call it somewhere between say, 35 to 45% has historically been where the Bitcoin percentage of supply in profit bottoms, where more than half the holders are underwater from where they entered Bitcoin. Right now, again, it is 74%. Bitcoin just went down to about 62%. So, it's already getting closer to that milestone.
But what you'll notice is that when the highs are in, there does tend to be a deeper drop by the percentage of of Bitcoin in loss and profit, right? There's a different, a larger drop, and then there's sort of this counter-trend rally back up, and then it tends to continue down. You'll notice that often times, with the exception of last cycle in 2021, often times when it gets this low, it does mean the cycle is over.
Now, in this case, in 2021, you can see it was a little bit different. Technically, we did go to a new all-time high. Um, but it was somewhat fleeting. And so, I think when you look at a chart like this going into the midterm year, it makes sense to assume that, in my opinion, that this will yield a lower high that will then go into a lower low.
And really, when you look at say, a moving average of these, like a 30-day, uh, moving average of the percentage of Bitcoin and supply and loss, you can start to see that that behavior that we're talking about, right? You can see how they kind of converge back to one another, um, near cycle lows. And near cycle highs, they obviously are further and further apart as Bitcoin goes to all-time highs. It then stays up here. This is not an indicator we talk about a lot in a bull market. And the reason we don't talk about it is because it can stay at the highs for years, right? Like, what what point is it to say, oh, the supply and profit is 100%? Well, you know that when it's at a new all-time high, and we know that it can stay like that for a long period of time.
But once this starts dropping into the midterm year, yeah, I think it makes sense to start looking at at these two charts starting to converge back on one another. And just remember, if you're sitting around here, and if later this year, these charts have converged, the supply of profit and loss have converged back towards each other, just like they did at the end of 2022, just like they did at the end of 2018, just like they did at the end of 2014. If you see that happen at the end of 2026, just remember that historically, that will have been a good indicator for getting us close to wherever the market cycle low for Bitcoin is for that particular market cycle.
At the end of the day, all models are wrong, some are useful, but I think this is an aesthetically pleasing way to look at Bitcoin through the lens of its market cycles.
If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and again, check out Into the Cryptoverse Premium at into the cryptoverse.com if you want to reach out for inquiries. We also have Benjamin Cowan.com as well if you're looking to get in touch with me. Thank you guys for tuning in. Make sure you subscribe, and I'll see you next time. Bye.