On-chain data reveals that Bitcoin investors are enjoying an average profit margin of 121%. This uptick stirs curiosity whether such profitability levels have historically indicated market tops.
CryptoQuant analyst Axel Adler Jr recently examined the latest trends in Bitcoin’s Average Profitability Index in a post. This index gauges Bitcoin’s spot value against its realized price—a metric that represents the acquisition cost of the average investor, determined via on-chain data reflecting the last transaction price of each circulating coin.
When the Average Profitability Index surpasses 100%, it denotes that the spot price of Bitcoin outpaces its realized price, signaling net profitability for the average investor. Conversely, a value below 100% indicates that the market collectively holds coins at a net unrealized loss. A 100% value implies investors are breaking even.
Recent trends show an upsurge in this profitability index as Bitcoin reaches a new all-time high. The current index value stands at approximately 221%, signifying substantial gains for investors, with Bitcoin addresses collectively realizing a 121% profit.
Historically, rising profits tempt holders to take profits. Although the current Average Profitability Index level suggests significant gains, it’s unclear if it’s high enough to trigger a widespread selloff. Previous bull run peaks saw this index reaching 460% in 2017 and 395% in 2021. The highest value in the current cycle was 272% in March, suggesting Bitcoin might still ascend further before reaching a market top.
As of now, Bitcoin is trading at around $76,200, marking a 9% increase over the past week.
