Thanks to the recent rally in the price of Bitcoin, the vast majority of BTC wallets have turned a profit.
Taking into consideration the latest on-chain movements of all existing BTC, 91% would appear to be in profit.
Actually, it is only an estimate, because it assumes that the purchase price is the market price at the time of the last on-chain transaction. This is only an approximation, but since it is impossible to know the actual purchase price for every Satoshi, it is the best approximation we have.
It is also worth noting that it does not refer to the percentage of wallets or addresses in profit, but to the percentage of individual BTC (or, better yet, individual Satoshis). One Satoshi is equal to one hundred millionth of a BTC, and it is the smallest fraction in which Bitcoin on-chain can be divided.
Summary
The Bitcoin wallet profit chart
The chart published on X by PlanB shows the trend over time of the percentage of BTC in profit.
It is very curious to observe that during last year’s bear-market bottom, this percentage never significantly dropped below 60%.
This is due to the fact that many BTC have been inactive for many years because they are “lost”, meaning they are no longer usable because their owner has lost the private keys necessary to access them.
Not knowing exactly how many Bitcoin are to be considered lost, it is not possible to calculate the true percentage of BTC in profit.
Also because throughout the history of Bitcoin, it has never fallen below 60%. The reason is that in the first 2 years (2009 and 2010), practically everyone was in profit. And when the price started to decline significantly for the first time, in the second half of 2011, there were already many stagnant Bitcoins, including the famous one million BTC mined by Satoshi Nakamoto.
All this makes it particularly interesting that in August of this year this percentage dropped to 60%, which is close to historical lows, while now just a few months later it has skyrocketed above 90%.
The reasons behind the recent Bitcoin rally
The reason for this rise is easily explained.
Between mid-August and mid-September, the price of Bitcoin had dropped from $29,000 to $25,000. This probably caused some sales that were then partly for sale, but today they instead appear to be profitable purchases.
In particular, starting from October 16th, a rally began that brought the price first to $30,000, then to $35,000, and then even above $42,000.
In the course of 2023, there have been four moments of BTC price growth and three moments of decline.
After the initial rise in January and the first decline in March, the percentage of BTC in profit remained above 70%. It fell below this threshold with the second decline in June, while it reached near lows only between August and September.
Note that something similar also happened during the last cycle, between 2018 and 2020, before the last major bull run was triggered.
The halving anticipation
The anticipation is all for next year’s halving, scheduled for April 2024.
In the past, it has never happened that the market priced in advance the impact of the halving on the price of Bitcoin. In fact, both in 2016 and in 2020, several months were needed after the halving before the market started pricing in its impact on the market value of BTC.
This time it almost seems like the market has already started pricing it from now on.
The fact is that, if the halving is certain (and most likely will happen in April), its impact on the price is not certain at all.
No one knows exactly how much the halving of the rate at which new BTC are created will increase prices in theory, also because this impact should be lower than that of past halvings.
But combining all this with the probable approval of Bitcoin spot ETFs in the USA, expected in early January, and the beginning of interest rate cuts by the Fed, expected in March, the resulting picture is that of a crypto market that is already pricing in significant future price increases.
The hypothesis that is circulating is therefore that of a possible one-year advance compared to what was expected for the next major bull run, which many believed should arrive in 2025 but could instead arrive as early as next year.
These are just hypotheses, and they are not even the only ones circulating since there are also those who believe in a possible strong retracement. But even just the fact that such a hypothesis can be taken into consideration is something very interesting.
