Key takeaways:
Bitcoin has dropped 14% from its $124,500 all-time high, which led to a drop in BTC supply in profit, signalling market exhaustion.
The $112,000-$116,000 supply zone must be overcome to start the next leg higher.
Bitcoin (BTC) dropped 14% from its $124,500 all-time high to a seven-week low of $107,400 on Saturday. This correction saw the market transition into widespread net distribution, causing the “euphoric phase” to cool, according to new analysis.
Bitcoin’s drop to $107,000 suggests “exhaustion”
The rally to new highs in mid-August pushed 100% of Bitcoin supply into profit, according to data from Glassnode.
Bitcoin: Supply in profit. Source: Glassnode
Sustaining such periods requires persistent capital inflows strong enough to offset relentless profit-taking, a situation that rarely endures for long.
“This behaviour is often captured by the 0.95 quantile cost basis, the threshold above which 95% of supply is in profit,” Glassnode said in its latest The Week Onchain Report.
Related: Bitcoin set to beat ‘red September’ dip for third straight year
The most recent euphoric phase lasted about 3.5 months, with more than 95% of the supply in profit.
Still, Bitcoin fell back below this band on Aug. 19 as “demand finally showed signs of exhaustion,” the market intelligence firm said.
At present, 90% of Bitcoin in supply is in profit, which is between the 0.85 and 0.95 quantile cost basis, or in the $104,100–$114,300 range.
“Historically, this zone has acted as a consolidation corridor following euphoric peaks, often leading to a choppy sideways market,” Glassnonde wrote, adding:
“Breaking below $104.1K would replay the post-ATH exhaustion phases seen earlier in this cycle, whereas a recovery above $114.3K would signal demand finding its footing and reclaiming control of the trend.”Bitcoin: Supply Quantiles Cost Basis Model. Source: Glassnode
Similarly, the percentage of short-term holder supply in profit collapsed to just 42% from above 90%, indicating a textbook cooling-off for the market.
Glassnode further explained:
“Such sharp reversals typically provoke fear-driven…..
