- The net unrealized gain/loss for all bitcoins is currently 0.11 BTC, or $2,500.
- Earnings have been positive since Jan. 13, after being negative for most of the previous six months
- Two-thirds of the bitcoin supply is considered a profit, even though prices are still nearly 70% down from all-time highs.
Whatever you think bitcoin As an asset, the public ledger that is the blockchain makes it very interesting to get a little obsessive and look into the analytics behind the asset. Like it or hate it, we have a wealth of information across on-chain analytics that we simply don’t have for most other assets.
Today, let’s do a quick little piece assessing unrealized bitcoin gains. In simple terms, what would be the profit or loss if all bitcoins were sold at the moment? Obviously, this would hurt the market, and everyone’s net worth would vanish. But hey, don’t spoil the party. It’s still a reasonably indicative measure.
After all, if Bitcoin is to function as a store of value, it must fulfill the definition of that term — that is, protect one’s wealth.
The majority of Bitcoin is still profitable
The first step is simple. Let’s look at how much Bitcoin is in profit and supply. The chart below shows this, as the total supply of Bitcoin mechanically rises through its predetermined schedule towards the final supply cap of 21 million coins.
Obviously, the harsh effects of the bear market. That red shows a lot on the right side of the chart, with over 10 million bitcoins losing in November 2022. Thank you, Sam.
The small resurgence seen in 2023 has brought that number down again, with 6.6 million bitcoins currently lost.
The following chart shows it in a different way – tracking the percentage of total supply in profit.
We can see that with two-thirds of the total supply in profit, the total unrealized profit of Bitcoin is likely to be a positive number, i.e. if everyone sold at the current price, the difference between the current price and the price at which the Bitcoins were bought would be positive.
and he. He earned 0.114 bitcoins, or about $2,500 at current prices.
The profit number flipped positive on January 13 of this year, after being negative for most of the second half of 2022, as Bitcoin discovered the hard way how difficult things can be when the money printer is rejected and interest rates are no longer zero.
What does all this mean?
So what does it all mean? Well nothing. somewhat.
The metrics in the series are fun to fiddle with, and some of them can certainly be good indicators. But the charts above are just a great way to look at prices, really. The price goes up, and the profit goes up. The price goes down, and the profit goes down.
Not to mention that at the moment the market is clearly following macroeconomic news, and it’s a basic bet that Fed Chair Jerome Powell’s words will be kind.
I’ve actually played with layering price on different charts, trying to ascertain if there is an effect. But, nah.
However, despite the lack of predictive power here, it is an interesting way to view the dynamics of Bitcoin and gauge the overall market sentiment.
The uptick in profit metrics is evident since the beginning of the year, even if prices are still the same size below bull market levels. It remains to be seen if the market continues to bet on Fed easing rates, or if inflation and employment numbers give it reason to hesitate and back off.
It’s a big world, and Bitcoin lives in it. Stay tuned for more pieces on the series, and we’ll try to dig into that relationship a little more.