Bitcoin: Profitable Addresses in Free Fall

The Bitcoin market is full of surprises. In the span of a few months, we have witnessed a steep decline in profitable Bitcoin addresses, from 100% to 80%. Such a turnaround deserves a thorough analysis. By examining the data provided by Glassnode, we delve into this captivating dynamic to understand its workings.

The dazzling rise

At the beginning of 2024, Bitcoin shone like a shooting star. With a percentage of profitable addresses flirting around 92% and a price nearing $50,000, the trend seemed solid. But the real surge occurred in March. During this period, Bitcoin crossed the $70,000 mark, bringing profitable addresses to an impressive peak of 100%.

This surge is the result of a confluence of factors: a rise in Bitcoin prices, anticipation of upcoming events like the halving, and general optimism among investors.

It’s a classic phenomenon in cyclical markets: a rapid rise before a potential adjustment. The figures speak for themselves: the percentage of profitable addresses exploded, reflecting a market in full euphoria.

The Post-Halving Bitcoin storm

The euphoria didn’t last. After the April 2024 halving, things started to get complicated. Bitcoin’s price began to drop below the $55,000 mark, and the percentage of profitable addresses followed a downward trajectory, reaching around 80% in August.

This abrupt change highlights the inherent volatility of the Bitcoin market, exacerbated by major events like the halving.

The decline in address profitability can be attributed to several factors. The first is the increased selling pressure as Bitcoin’s price decreases. Investors who were in profit may cash out their gains, which can add additional pressure to the price.

Next, after the halving, the Bitcoin market frequently undergoes price corrections, as shown by past cycles. These adjustments are natural, but they highlight Bitcoin’s volatility.

The repetitive model

To understand this decline, it’s essential to look at past cycles. Historical data shows that Bitcoin follows a cyclical pattern: strong rises followed by significant drops. Between 2018 and 2023, we observed similar patterns, where periods of high profitability were followed by price corrections.

These cycles are not anomalies but rather characteristics of the crypto market. Changes in market sentiment, global events, and economic adjustments all play a role in defining these cycles.

The current trend, with declining address profitability, fits perfectly into this model. The Bitcoin market is inherently cyclical, and each growth phase is followed by a correction phase.

The drop in profitable Bitcoin addresses, from 100% to 80%, is a striking reflection of the complex dynamics of the crypto market. This fluctuation is both a sign of typical market cycles and an opportunity for analysis for investors.