95% of Bitcoin Holders in Profit: Is the Market Overheating?

On-chain data indicates that approximately 95% of Bitcoin holders are currently in profit following the recent bullish movement in the asset’s price.

Only a Handful of Bitcoin Addresses Remain Underwater

In a recent post on X, the market intelligence platform IntoTheBlock provided an update on the profitability of Bitcoin holders. The analytics firm utilized on-chain data to arrive at this conclusion.

IntoTheBlock analyzed the transaction history of each address on the network to assess the average price at which the coins were acquired. Wallets that have a cost basis below the current price are assumed to have some unrealized profit.

Conversely, addresses that fall on the opposite end are regarded as loss holders. The analytics firm categorizes the former as “in the money” and the latter as “out of the money.”

Addresses that have an average acquisition price equal to the latest spot price of the cryptocurrency would simply be breaking even on their investment. These are classified as “at the money.”

Here’s how the distribution across these three categories looks on the Bitcoin network currently:

As shown above, roughly 95% of existing Bitcoin holders are experiencing a net profit. About 3% are at their break-even point, while the remaining 2% are underwater.

This indicates that the market distribution is significantly tilted towards profit holders, driven by the recent price surge of the asset.

“With 95% of Bitcoin addresses now in profit, market sentiment is thriving,” notes IntoTheBlock. “Historically, such levels have indicated strong bullish momentum, but they may also hint at a potential overextension.”

Typically, investors in profit are more inclined to sell their coins at any moment, so a large percentage of them being in the green can heighten the chances of a mass sell-off motivated by profit-taking. This is why a high profitability ratio can signal potential overheated conditions.

A considerable number of addresses are currently in the money, suggesting that another profit-taking episode could take place. It remains to be seen whether the demand will be sufficient to absorb any selling pressure or if Bitcoin will reach a peak.

On a more positive note, Bitcoin inflows to “accumulation addresses” have surged lately, as pointed out by CryptoQuant community manager Maartunn in an X post.

Accumulation addresses are those wallets that have no history of selling within the network. These steadfast HODLers have just accumulated a significant 56,700 BTC, which could indicate they are entering another phase of accumulation.

BTC Price

At the time of this writing, Bitcoin is trading around $67,400, having risen over 11% in the past week.