Bitcoin could be on the verge of breaking into a multi-month bull run, according to a lesser-known data metric.
The percentage of bitcoin’s circulating supply in profit is currently hovering at 87%, according to data provided by blockchain analytics firm . The metric is calculated by looking at the ratio of coins with a value that is higher now than when they were last moved.
Essentially, over 16 million out of the total of 18.4 million is currently making gains. More importantly, the 87% level is close to that seen at the onset of the previous long-term bull markets.
“Historically, levels of have clearly marked pronounced bull markets,” in its weekly insights report.
For instance, the percentage of circulating supply in profit rose above 90% in October 2016 as the cryptocurrency rallied from the August low of $470 up to record highs above $1,100 in the first quarter of 2017.
Bitcoin continued to gain altitude and ultimately reached a record high of $20,000 in December 2017. Throughout the meteoric rally, the non-price metric hovered largely in the range of 80 to 99%.
Looking further back, the percentage of supply in profit crossed well above 90% in January 2013 and remained above that level for three months as bitcoin rose to clock highs near $250 in mid-April. A similar pattern was seen as prices rose to record highs above $1,000 in mid-November the same year.
So, if history is a guide, bitcoin may embark on a stellar bull run if and when the percentage of supply in profit rises above 90%.
Bitcoin will likely cross that key level if prices rise above $10,000, put forward by analysts that $10,000 is the level to beat for the bulls.
At press time, bitcoin is changing hands near $9,740, marginally down on the day. The cryptocurrency has rallied by nearly 150% over the past three months, lifting the percent supply in profit from 43% to 87%.
The metric may be of help in major price tops and bottoms. In the past, readings near 40% have marked bear market bottoms, while highs above 95% have coincided with market tops.
Disclosure: The author holds no cryptocurrency at the time of writing.