Bitcoin recovers every now and then, trends change and new levels are established. But this rally in particular is of great importance at the moment, as it brought the much-needed relaxation from the earlier slumps. Overall, there are strong signs of a short-term bull market.

Bitcoin appears to be profitable

To gain any perspective on this profitability, it is necessary to observe the overall supply of Bitcoin in profit. Profitability spiked for the first time in over 45 days as it only hit its lowest point last week at 12.34 million BTC / 66% of total existing supply. The 11.2% increase this week added 1.2 million BTC to that offer, creating a positive vibe for traders. Now that over 77% of the bitcoin in circulation is profitable, profits would of course be better too.

Total bitcoin supply in profit up 11.2% | Source: Glassnode

And that is the case. The net profit / loss chart showed that profits were dominating the market. The green line hit $ 1.8 billion yesterday on July 26th. That 83% jump in profit has carried over the indicator from the mere $ 30 million profit made on July 25th. In simple terms, when realized gains hit a 79-day high, it helped investors regain many of the losses they had faced for some time.

Bitcoin shows gains at a 2 month high | Source: Glassnode – AMBCrypto

In addition, the total transfer volume increased by 1.1 million BTC on July 26th. This sudden jump is evidence of the increased investor participation that came with the price hike. This also shows how cautious investors were, as volumes only rose when Bitcoin hit a high of $ 40,000 and only then.

Bitcoin trading zone

The MVRV (Market Value to Realized Value) ratio is used to compare the cash valuation of a coin to its on-chain cost base. Hence, the type of market such rallies result in is better understood when previous cases are used as references. Historically, the MVRV ratio only reached these zones in these cases –

  1. Early bull cycle with macro-level prices bottoming out and money accumulators returning to noticeable levels.
  2. Medium bear cycle in which investor profits plummet before surrender.
  3. Double pump where jolting is observed in the middle of the cycle.

Bitcoin MVRV ratio | Source: Glassnode

As soon as the market reverses the macro trend and resumes the bull run, a similarity to the “double pumping” of 2013 can be observed. Additionally, investor sentiment could also turn positive as NUPL shows the king coin breaking closer to its two-month downtrend and approaching a more positive zone of denial.

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