If you recall my analysis from six days ago, I pointed out that the percentage of supply in profit was within a key range, and Bitcoin’s price is currently positioned near a significant psychological threshold. According to historical data, this region represents a period where market participants form either optimistic or pessimistic views depending on whether they are in profit. In the current scenario, as long as Bitcoin remains in this critical range, the likelihood of a significant decline appears low.

Supply in Profit Ratio and Psychological Threshold

Bitcoin's performance in this critical zone is closely tied to the "Supply in Profit" metric. This metric indicates that optimism tends to increase when a significant portion of investors are in profit. At present, the supply in profit ratio is retesting this psychological turning point. If this level holds, it could support upward movements in the market and potentially push Bitcoin’s price even higher.

Previous Market Cycles and Price Increases

Looking at previous bull markets, such as in 2016 and 2020, Bitcoin maintained a strong uptrend when its price remained between this psychological threshold and the optimism zone. If this threshold is surpassed, there is a high probability that we could see similar upward price movements.

Low Likelihood of a Major Decline

Based on current price movements and the supply in profit metric, as long as Bitcoin holds this level, the probability of a significant decline remains low. However, if the price falls below this level, market sentiment could turn pessimistic, leading to price pullbacks. Conversely, if this threshold is exceeded, it could fuel further optimism and increase the chances of reaching new price highs.

Conclusion

Bitcoin is once again testing a crucial psychological level, and breaking above this zone could pave the way for a strong upward movement.

Written by datascope