Bitcoin On-Chain Metrics Look Bullish, Bitfinex Report Highlights

The supply “in profit,” a measure of market sentiment, has risen 20% since January.

AccessTimeIconFeb 7, 2023 at 5:22 p.m. UTC
Updated Feb 8, 2023 at 4:01 p.m. UTC
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On-chain indicators are pointing toward positive sentiment for bitcoin, the world’s largest cryptocurrency by market capitalization.

The bitcoin supply "in profit," which is the percentage of existing coins whose price at the time they last moved was lower than the current price, has increased since the start of the year, according to data from Glassnode. The indicator has increased by over 20% since early January.

The bitcoin supply ‘in profit' indicator has increased by over 20% since early January. 
The bitcoin supply ‘in profit' indicator has increased by over 20% since early January. (Glassnode)

“This implies that larger and longer-term investors currently hold profitable on-paper spot positions,” Bitfinex analysts wrote in a report. “This trend is healthy for the latter half of a bear market as a sustained 30-day uptrend after an extensive downtrend on this indicator has historically provided a good buy signal for the following two years,” the report added.

Although bitcoin and the wider crypto market have been trading well below the all-time highs reached in November 2021, the crypto market has witnessed a positive upward trend over the past three months with bitcoin rising 50% over the last three months.

On-chain data also suggests "HODLer" (HODLers are considered long-term holders of the cryptocurrency) conviction is high, with the Reserve Risk for bitcoin recently falling to its lowest level ever.

Reserve Risk is a cyclical oscillator that models the ratio between the current price and the conviction of long-term investors, according to the Bitfinex report. The indicator trades at low levels when there is heavy investor accumulation and HODLing is the preferred market strategy.

“The current price is the incentive to sell and the conviction in the ratio is a series of sub-metrics that factor in the opportunity cost of not selling. Lower the ratio, higher the conviction that investors have,” the report said.

Bitcoin price vs. Reserve Risk (Glassnode, Bitfinex)
Bitcoin price vs. Reserve Risk (Glassnode, Bitfinex)


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Lyllah Ledesma

Lyllah Ledesma is a CoinDesk Markets reporter currently based in Europe. She holds bitcoin, ether and small amounts of other crypto assets.

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