Over 94% of Bitcoin holders are now in profit following BTC’s recent rally above its 2021 high of $69,000. But will it spark profit-taking at this key price level in the short term?

94% of all BTC is back in profit

Data from market intelligence firm CryptoQuant, analyzed by independent analyst Axel Adler Jr,  shows  that 94% of Bitcoin ( BTC ) supply is currently in profit, with the “majority of coins having been purchased at the $55K level.”

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Bitcoin percent supply in profit. Source: Axel Adler Jr

“In particular, Short Term Holders have been rewarded for buying the chopsolidation dip in recent months,” said Checkonchain analyst Checkmate in response to BTC’s rising profitability, adding that most STHs now have most of their holdings “back in the money.”

“This reinforces Buy-the-Dip behavior, and is a sentiment tailwind”
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Bitcoin short-term holder supply in profit/loss ratio. Source: Checkmate

History reveals that such a high supply of Bitcoin in profit is usually a precursor to a significant price drop, suggesting profit-taking at the highest levels.

When this metric reached such levels in late September, Bitcoin plunged by 8.7% from $65,800 on Sept. 28 to below $60,000 on Oct. 3 as investors and traders booked short-term profits.

A similar scenario was seen in March 2024, when the price hit new all-time highs above $73,800, buoyed by capital flows into US-based spot Bitcoin ETFs and anticipation of the 2024 Bitcoin halving event . What followed was a 23% BTC price drop from $73,835 to a low of $56,500 on May 1.

Bitcoin’s price also moved in the same way during past bull cycles when high levels of Bitcoin supply in profit following the 2017 and 2021 bull markets preceded bear market cycles.

Bitcoin price runs into major resistance at $69K

Despite the recent bullish price recovery, Bitcoin was rejected at $69,000.

“$BTC is currently facing resistance from a major liquidity zone,” said Japanese trader Jusko Trader in an Oct. 22 post on X. 

The trader was referring to the supply area between $67,300 and $69,400, which has proven to be a stiff barrier over the last six months.

At the time of publication, Bitcoin was trading below this zone at $67,200, but Jusko Trader said that the latest drop was a “healthy” pullback and that BTC’s bullish momentum remained.

“BTC’s bullish momentum is more. These minor corrections are healthy for major pullback as they bring more/new cash flow.”
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BTC/USD daily chart. Source: Jusko Trader

About $1.65 billion worth of cumulative leveraged short positions stand to be liquidated across all exchanges if Bitcoin manages to rise above the $68,000 mark.

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Bitcoin exchange liquidation map. Source: CoinGlass

Bitcoin might get help in breaching that level from inflows into the US spot Bitcoin exchange-traded funds (ETFs) over the coming days.

Inflows into the US spot BTC ETFs have been gaining momentum since Oct. 11, reaching $21.2 billion in cumulative inflows on Oct. 22, according to Farside Investors data.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.