Bitcoin’s recent price movement has pushed a key on-chain profitability indicator into a pattern that, in 2022, preceded a prolonged downturn. One analyst warns that a drop below $70,000 could risk repeating that “year-long” reset.
In a December 30 analysis, Axel Adler Jr. noted that Bitcoin’s “Supply in Profit” metric—which tracks the amount of BTC held above its purchase price—is at a turning point. After stabilizing between $87,000 and $90,000 following a pullback from October highs, the metric has fallen sharply from peaks above 19 million BTC to roughly 13.2 million BTC. This decline has created a significant gap between its short- and medium-term moving averages.
Adler’s focus is on the spread between the 30-day and 90-day simple moving averages (SMAs) of Supply in Profit. Following the correction from the all-time high, the 30-day average fell well below the 90-day average, creating a gap of about 1.75 million BTC. He observed that a similar pattern emerged in 2022 before an extended bear market, but highlighted a key difference now: the 365-day moving average remains at historically high levels, suggesting the longer-term profit structure hasn’t fully broken down.
The immediate question is whether the 30-day average has found a bottom. Adler identified December 18 as a local low and noted the average is now starting to turn upward. For this recovery to be confirmed, the Supply in Profit must hold above its 30-day average, which essentially requires Bitcoin to maintain its current price levels or higher.
Adler provides a specific projection for a bullish recovery in this signal. He estimates the gap between the 30-day and 90-day averages is narrowing by roughly 28,000 BTC per day. This is primarily because the 90-day average is being pulled down mechanically as the high values from early October—when Supply in Profit peaked with prices between $115,000 and $125,000—roll out of its calculation window.
This rollover effect is expected to continue through late January, acting as a tailwind that could allow the 30-day average to rise above the 90-day average even without a major increase in Supply in Profit. If current trends hold, Adler projects this bullish crossover could occur between late February and early March.
However, this forecast is highly dependent on price. Adler estimates that Supply in Profit has an “elasticity to price” of 1.3x, meaning a 10% drop in Bitcoin’s price could lead to a roughly 13% decline in the supply held at a profit. The critical threshold in his model is the $70,000 zone.
“If the price falls below $70,000, Supply in Profit would drop to around 10 million BTC, and the 30-day average would start declining faster than the 90-day average,” Adler explained. “The gap would stop narrowing and begin to expand again, postponing the bullish signal indefinitely.”
In that scenario, the setup would more closely resemble 2022, where the spread widened instead of compressed, pushing out the potential recovery for up to a year. Conversely, the constructive path involves holding above $75,000 to $80,000 through January, which would support Supply in Profit and maintain the current pace of convergence between the averages.
At the time of writing, Bitcoin is trading at $88,102.
Frequently Asked Questions
FAQs Bitcoins Potential YearLong Downturn
BeginnerLevel Questions
1 What does a yearlong downturn for Bitcoin mean
It means the price of Bitcoin could trend downward or trade within a lower price range for an extended period potentially up to a year instead of quickly recovering or entering a new bull market
2 What is onchain data
Onchain data is public information recorded on Bitcoins blockchain It includes metrics like transaction volume wallet activity and where coins are being held which analysts use to gauge market sentiment and potential price trends
3 Why is onchain data important for predicting price
It provides a view of what actual investors are doing rather than just how they are feeling This data can reveal patterns of accumulation or distribution that often precede major price moves
4 What specific scenario could trigger a long downturn
The key scenario is if longterm Bitcoin holders start consistently selling their coins into the market If this selling pressure outweighs new buying demand for a prolonged time it can suppress the price
5 Is this downturn a sure thing
No Onchain data suggests a risk or a possibility based on historical patterns It is not a guarantee External factors like new regulations macroeconomic shifts or institutional adoption can change the outcome
Advanced Practical Questions
6 What specific onchain metrics are warning of this
Analysts often watch metrics like
Spent Output Age Bands Tracks when old coins are suddenly moved potentially to be sold
Exchange Inflows Large movements of Bitcoin to exchanges can signal an intent to sell
Realized PriceMVRV Ratio Measures whether the average holder is in profit or loss which influences selling decisions
7 How does this differ from normal market volatility
Normal volatility involves sharp upanddown movements within a trend A prolonged downturn suggests a more fundamental shift in the supplydemand balance where selling pressure becomes dominant for many months leading to a sustained bearish trend or sideways accumulation phase