Bitcoin Rally Stalls as 72% of Coins Remain Profitable
September recovery reaches inflection point with zero momentum indicator
1Profitability surge during September rally
Bitcoin's supply in profit jumped from 65% to 73.8% during September's recovery, marking the highest level since January 20. This indicates significant amounts of previously underwater holdings returned to profitability. However, the metric slightly retreated to 72% by month-end, remaining below the long-term average of 76% but above September's lows.
2Momentum indicator hits critical zero point
Both fast and slow lines of Bitcoin's Impulse Performance indicator fell to zero on September 29-30, despite BTC trading near $83,000. While zero momentum doesn't confirm a downward reversal, it signals the rally's pause. Analyst Adler Jr. emphasizes the crucial next move direction from this inflection point, where negative values would signal bearish momentum.
3Historical context of profit metrics
In Bitcoin's historical context, supply-in-profit levels can reach approximately 92% during strong bull markets. The current 72% reading sits between September's lows and the long-term average, suggesting neither extreme bullish nor bearish conditions. This mid-range position makes the current moment particularly sensitive to momentum shifts.
4Potential downside risks
A late May/early June precedent shows how negative momentum (indicator dropping to -96) coincided with Bitcoin's price falling from $77,000 to $63,000. If current momentum turns negative while profitability declines, September's recovered supply could return to loss positions. This would signal weakening recovery strength and potential further downside.
5Market sentiment indicators
While on-chain metrics show caution, market sentiment polls reveal 78% of participants remain bullish on BTC reaching $93.2K versus 22% predicting a drop to $76.2K. This optimism-pessimism split creates tension with the neutral technical indicators, highlighting market uncertainty at current levels.
6Key threshold for trend confirmation
The critical development to watch is whether the momentum indicator moves above or below zero in coming days. Sustained negative readings combined with declining profitability would confirm bearish momentum, while positive movement could reignite the September rally. This binary outcome makes current levels decisive for near-term direction.
7Profitability-momentum correlation
The relationship between supply-in-profit percentages and price momentum creates a feedback loop. Rising profitability typically supports positive momentum, while declining metrics can accelerate downturns. The current 72% level represents a balance point where small changes in either direction could trigger outsized market reactions.
8Strategic implications for traders
Professional traders monitor these confluence indicators to assess whether September's recovery was a bear market rally or sustainable uptrend. The simultaneous analysis of profitability metrics and momentum provides more reliable signals than price action alone, especially during periods of market indecision near key psychological levels.
Original article: DailyCoin — Bitcoin Rally Stalls as 72% of Coins Remain Profitable