Bitcoin’s recent price movements have triggered alarm bells among analysts, with on-chain data indicating a configuration eerily similar to the one that preceded a prolonged market downturn in 2022. A key metric, "Supply in Profit," is at a critical inflection point, suggesting that the cryptocurrency could be bracing for a challenging year ahead if certain price levels are not maintained.
The Warning from On-Chain Metrics
Analyst Axel Adler Jr. highlights the "Supply in Profit" metric, which measures the amount of Bitcoin held above its acquisition price, as a crucial indicator. This metric has seen a significant drop from over 19 million BTC to roughly 13.2 million BTC since October highs. This decline has created a notable gap between the 30-day and 90-day Simple Moving Averages (SMAs) of the "Supply in Profit," where the shorter-term average has fallen considerably below the longer-term one. While reminiscent of the 2022 market setup, Adler notes a crucial distinction: the 365-day moving average remains historically elevated, implying that the longer-term profit structure has not yet fully unwound.
Bullish Hopes and the Critical Threshold
For a bullish recovery to materialize, Bitcoin's "Supply in Profit" must sustain above its 30-day average. This effectively requires BTC to hold its current price levels or ascend further. Adler projects a potential bullish cross — where the 30-day average rises above the 90-day — by late February to early March, assuming current rates of change persist. This would be aided by a "tailwind" effect as older, higher-priced values roll out of the 90-day moving average calculation, even without a dramatic surge in fresh "Supply in Profit."
The $70,000 Invalidation Point
However, this optimistic forecast is highly sensitive to Bitcoin’s price performance. The analyst pinpoints a critical "fault line" at the $70,000 zone. Should Bitcoin's price fall below this level, the "Supply in Profit" would likely shrink to approximately 10 million BTC. In such a scenario, the 30-day SMA would decline faster than the 90-day, causing the gap between them to expand rather than narrow, indefinitely postponing any bullish signal. This would mirror the 2022 downturn, potentially ushering in another year-long recovery period. Conversely, maintaining prices between $75,000 and $80,000 throughout January would offer a more constructive path, keeping "Supply in Profit" supported and preserving the convergence trajectory for these key moving averages. As of writing, BTC trades at $88,102, placing it above this critical threshold.
