9 Out Of 10 Bitcoin Holders Are In Profit: Is It Time to Buy Bitcoin?

Financial analysts rely on the wealth of data available to make informed trading decisions. An options trader can view implied volatility, Greek values and Black-Scholes to make a trading decision. 

But for nearly all markets, some data is inevitably hidden from traders because it is private information. For example, equity traders can't see the balance of a particular private portfolio at any given time. This can lead to difficult decision-making, as not all data is available to traders. 

But this is not the case for blockchain.

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Blockchain technology is entirely public, meaning that every transaction, wallet address and historical portfolio is viewable at any time. This provides an unprecedented amount of data for traders to use. One of the most interesting data points is the percentage of wallets that are in profit, meaning that the average price at which Bitcoin (BTC) went into their wallet is below the current price.

The percentage of addresses in profit is then plotted on a graph, beginning with the launch of Bitcoin through to the current day. The chart shows some interesting patterns. During the early years of Bitcoin, the percentage of profitable wallets oscillated heavily, going from 99% in June 2011 to less than 15% by November 2011. The percentage never dipped below 28% after lows in November 2011. 

Since then, the percentage has generally been increasing. This is largely because Bitcoin has seen huge price increases over the past decade. If you bought Bitcoin in the past decade, there is almost a guarantee that you are in profit. However, some wallets are not in profit. These wallets likely bought Bitcoin near the time it reached new all-time highs (ATHs) in early March. As of writing, nearly 90% of wallets are in profit. 

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This begs the question of whether Bitcoin can continue to go up. Simple logic would say that if 9 out of 10 people are in profit, they are more likely to sell, which would cause the price of BTC to go down. While BTC has seen a slight pullback over the past month, many are still not selling. This could mean that many wallet addresses are bullish on Bitcoin not just for the short term but perhaps for years to come. 

The main two reasons for this stance are the Bitcoin cycle hypothesis and the potential for widespread adoption. The Bitcoin cycle is a roughly four-year trend that has existed since the beginning of Bitcoin in which the price hits relative lows, climbs before the halving, reaches new highs and then falls to new relative lows. If this cycle continues in 2024 and into 2025, Bitcoin could continue to rise, potentially above $100,000. With spot exchange-traded funds (ETFs) and increased institutional investment, there is an argument that the price of BTC is just getting started. 

The percentage of wallets in profit does not give a clear picture of the future of Bitcoin. It simply provides traders with more information to help make informed decisions. Ultimately, the interpretation of the data is up to the discretion of each trader.

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