Supply in Profit/Loss Profile

Overview

This pillar analyzes the on-chain financial position of all coin holders, determining what percentage of the supply is held at a profit versus a loss. It provides a powerful, direct view of market sentiment and potential selling or buying pressure.

What It Does

By examining the price at which each coin last moved on the blockchain, this pillar classifies the entire circulating supply as either 'in profit' or 'at a loss' relative to the current price. It then aggregates this data into key metrics like Net Unrealized Profit/Loss (NUPL) and Spent Output Profit Ratio (SOPR). These metrics quantify the collective financial state and sentiment of the market.

Why It Matters

This analysis reveals critical market inflection points that price charts alone cannot show. Extreme levels of supply in profit often precede major sell-offs as holders take gains, while extreme levels of supply in loss signal potential market bottoms driven by holder capitulation.

How It Works

The process begins by accessing the full transaction history of a crypto asset's ledger. For each unit of supply, it identifies the market price at its last on-chain movement. This 'cost basis' is then compared to the current market price to determine its profit or loss status. Finally, all units are aggregated to calculate the total supply in profit and loss, which feeds into indicators like NUPL.

Methodology

The core calculation is the percentage of circulating supply whose last on-chain transaction price is below the current market price (in profit) versus above it (in loss). NUPL is derived by subtracting unrealized loss from unrealized profit, then dividing by market cap. SOPR is calculated for spent coins by dividing their realized value (sale price) by their value at creation (acquisition price); a SOPR above 1 indicates realized profits.

Edge & Advantage

It provides a direct measure of market-wide financial pressure and holder conviction, offering clear signals of greed or fear before they fully manifest in price action.

Key Indicators

• Percent Supply in Profit

  high

  The percentage of the total circulating supply that is currently 'in the money'.

• NUPL (Net Unrealized Profit/Loss)

  high

  A metric that defines market sentiment cycles by measuring the total paper profits vs losses of holders.

• SOPR (Spent Output Profit Ratio)

  high

  Measures the degree of realized profit or loss for all coins moved on-chain on a given day.

Data Sources

• Glassnode

  Industry-leading on-chain analytics platform providing comprehensive profit/loss metrics.

• CryptoQuant

  Provides on-chain data and market intelligence, including various SOPR and NUPL charts.

• Dune Analytics

  A platform for user-generated crypto analytics, useful for specific assets or custom queries.

Example Questions This Pillar Answers

• → Will Bitcoin's price be above $80,000 on December 31, 2024?
• → Will Ethereum's NUPL indicator enter the 'Euphoria' zone (> 0.75) in the next 3 months?
• → Will the market have reached a cyclical bottom before the end of Q3?

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