Bitcoin’s 71% Profitability Signal Is Bullish—but It Does Not Confirm a New Bull Market

Bitcoin has a constructive on-chain backdrop, but the available evidence does not establish that a durable new bull market has already begun. The more accurate description is an upside-biased consolidation: profitability has improved, volatility is unusually subdued, and institutional demand has returned at times. Yet those same conditions leave the market dependent on continued buying when holders approach prices at which they may be inclined to sell.

Why 71% of supply in profit matters

“Supply in profit” estimates the share of circulating bitcoin whose last on-chain movement occurred below the current price. More than 71% of supply was reported to be in unrealized profit, approaching a 74.7% historical average that Bitfinex analysts associate with past bear-to-bull transitions.38

That is a meaningful improvement in market structure. During Bitcoin’s May consolidation above $82,500, about 67% of supply was profitable; at comparable price levels later, the figure was above 71%.38 In plain terms, more holders had returned to profit.

But this is a context signal, not a trigger. A level near 74.7% has historically coincided with transitions, yet it does not guarantee a breakout or set a timetable for one. The percentage also changes with price, meaning a brief rally can make the setup look stronger and a modest pullback can weaken it quickly. The important evidence is sustained price acceptance and durable demand, not a single reading.

A stronger holder base also creates potential selling pressure

Rising profitability has a trade-off. As more coins become profitable, more holders have the option to realize gains when Bitcoin revisits previous local highs. Bitfinex analysts described this as a deeper pool of latent sell-side liquidity at those levels.3

There is also still a substantial underwater cohort. Reports citing CryptoQuant data put invested capital remaining at a loss at roughly $617 billion in late August.45 If Bitcoin rises toward those holders’ cost bases, some could sell simply to exit at breakeven. That does not make a rally impossible; it means fresh demand must be strong enough to absorb supply.

For that reason, an advance through the recent $80,000–$82,500 zone would be more persuasive if it is followed by a sustained hold rather than a short-lived spike.

Low volatility is a setup, not a directional forecast

Bitcoin’s one-month realized volatility was reported near historic lows. Glassnode’s analysis attributed the suppression more to long-term holders keeping coins off the market than to changes in market capitalization, derivatives open interest or funding rates.2

This can be constructive because a tightly held supply may leave less immediately liquid bitcoin available if demand expands. But low volatility alone does not predict whether the next large move will be up or down. It is best read as evidence of compression—and a reason to focus on the conditions that could resolve it.

The stock-market “decoupling” thesis remains disputed

Analyst Willy Woo argued that Bitcoin’s separation from U.S. equities resembles 2015, a period before Bitcoin’s 2017 bull market. CryptoQuant contributor Darkfost challenged that conclusion, pointing to a measure that remained positive for Bitcoin’s correlation with the S&P 500 through July 2026.51

The disagreement is largely about methodology and lookback period. It means the apparent decoupling is not reliable independent confirmation of a new bull market. At most, it is a hypothesis worth monitoring alongside price action, liquidity and demand.

What could confirm—or invalidate—the bullish case

The near-term case depends less on one threshold than on whether several signals align:

• Sustained ETF demand: U.S. spot Bitcoin ETFs saw meaningful early-September inflows, including a $730.9 million inflow on September 3, but the flow series remained uneven and recorded a $46.6 million outflow on September 8.3944
• Macro resilience: The U.S. Treasury’s larger long-end liquidity-support buyback limits took effect September 9 and were scheduled through November 4. The August CPI release on September 11 was another immediate event that could influence rate expectations and risk appetite.458
• A durable price breakout: A break and hold above the recent $80,000–$82,500 range would indicate that buyers are absorbing profitable and breakeven supply. Failure to hold gains—particularly with renewed ETF outflows—would fit a range-bound or false-start interpretation.340

There is a distinctly bearish alternative. Analyst CryptoCon has argued that the recent recovery could be a false bull-market start and that, under his halving-cycle framework, a final cycle bottom may not arrive until November 2026 through January 2027.2128 That is an analyst view, not a validated forecast, but it underscores why the current recovery should not be treated as confirmed simply because profitability has improved.

Bottom line

The 71% supply-in-profit reading supports a cautiously bullish interpretation: Bitcoin has repaired part of its on-chain structure and is nearing a level historically associated with regime transitions. Still, it is not confirmation of a new bull market.

Confirmation would require persistent demand, a breakout that holds above the recent resistance range, and an ability to absorb selling from holders returning to profit or breakeven. Until then, “consolidation with an upside bias” is more evidence-based than declaring a completed bull-market transition.