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Bitcoin continues its gradual recovery, currently trading above the $94,000 level at the time of writing. This upward trend follows a recent correction that pushed prices down earlier this month. Despite the recent gains, Bitcoin remains about 12.7% below its all-time high set in January.
While investors monitor price resistance levels around the psychological $100,000 mark, on-chain metrics are beginning to show significant changes in market behavior that may influence short- and mid-term sentiment. A key development recently highlighted is the rising proportion of the Bitcoin supply that is currently in profit.
As the market edges closer to historic euphoria thresholds, some analysts suggest that while this trend may support continued bullish movement, it could also introduce volatility as market participants assess when to lock in gains.
The shift in profitability levels is also being evaluated alongside other indicators such as leverage and RSI behavior, which are offering mixed signals.
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
