Cryptocurrency market observers are closely monitoring a compelling profitability trend in major digital assets, as highlighted by on-chain analytics firm Santiment. In a recent tweet, Santiment revealed that Bitcoin, Ethereum, and XRP Ledger are all exhibiting a noteworthy trend, with over 80% of their existing supplies currently in profit. This trend mirrors a similar scenario observed in March 2022, with Bitcoin, ETH, and XRP presently registering 83%, 84%, and 81% of their supplies in profit, respectively.
Santiment’s “Total Supply in Profit” metric serves as a valuable tool for assessing the overall profitability or depreciation of a network’s total supply at any given time. This straightforward metric helps determine whether a coin is currently valued higher or lower compared to its initial minting, mining, or circulation.
While the percentage of total supply in profit focuses on the supply available at a specific time, Santiment cautions that BTC, XRP, and ETH are currently operating at historically elevated profit levels, exceeding the 55%-75% range observed since 2018. The firm suggests that this heightened profitability may pose increased risk, emphasizing the need for vigilance in market monitoring.
Understanding the cryptocurrency market as a zero-sum game, where gains for one party often translate to losses for another, Santiment urges caution during periods of substantial profitability. While acknowledging the potential for further positive movements driven by factors such as increased exposure from exchange-traded funds (ETFs) and positive news, the analytics firm highlights a key indicator to watch for sustained long-term growth.
According to Santiment, a signal indicative of continued long-term growth would be a breach below 75% of supplies in profit for Bitcoin, XRP, and ETH. This nuanced analysis underscores the dynamic nature of the cryptocurrency market and the importance of considering both short-term and long-term perspectives in assessing the overall health and potential risks within the crypto space. Investors and enthusiasts alike are advised to remain attentive to these key metrics as they navigate the ever-evolving landscape of digital assets.
