• Those who bought the dip in Bitcoin are profiting, and here’s how

  • Following the recent May-June price drop, Bitcoin’s price dropped by more than 50%. Despite the fact that the market looked bleak at the time, chants of “buy the dip” persisted. Indeed, many traders and analysts predicted that Bitcoin at $30K would be a good buy.

    Then, as a fairly strong recovery began on July 22, analysts compared this cycle to the previous bull cycles of 2013 and 2019, speculating whether a similar magnitude of recovery will occur this time as well.

    The “Percent of Entities in Profit” of Bitcoin denotes the percentage of unique addresses whose funds have an average buy price lower than the current price. Notably, the percentage of profitable entities was the same in January 2018 as it was from May to September of 2019. A run to the same level was seen in 2020, but it was not achieved. This time, experts predict that BTC’s Percent of Entities in Profit will reach 2017 levels.

    The percentage of profitable entities is determined by factors such as HODLer composition, Bitcoin dominance, the number of active addresses, and transaction volume. With Bitcoin dominance reaching three-month lows and its price hovering near the $50,000 mark, things did not appear bleak for holders.

    Profitability analysis

    Bitcoin’s Profit as a Percentage of Supply was still struggling to reach the red zone. Even though it was in an uptrend at the time, if BTC remained above $50,000, a rise in the metric could be expected. Similarly, BTC’s percent UTXOs in profit had not yet reached the highs of May, and an uptrend could be expected at a higher price level.

    Long-term profitability of Bitcoin, on the other hand, is more dependent on historical trends and the movement of Bitcoins by large wallets, as well as traders calculating profits during recovery. Following a dip, the percentage of wallets that are profitable is determined by HODLer composition or the time of purchase.

    Regardless of the larger sentiment, if you bought the BTC dip, things will look bright for you. Looking at the long-term and short-term ROI of Bitcoin historically reflects the money made during that time period when calculating profits on BTC.

    Bitcoin has generated positive ROIs over the last week, month, and three months. Prior to the recovery, BTC ROIs were largely negative over longer time frames. That is, after the May 2021 dip and flash crash. Over the last year, the ROI in the USD market was +379 percent.

    Given that the May-June dip occurred roughly three months prior to press time, anyone who purchased the dip must have made a tidy profit by now. Furthermore, a Cryptoquant analyst noted that coins aged 6-12 months continue to rise, implying that younger coins mature into older ones and are not being spent, which was a positive sign. New participants profited around $60k, while the rest panicked and sold for around $30k, but they appear to be re-entering the market.

    For the time being, in response to looming concerns about consolidation, a large accumulation began in June at around $37K and is still ongoing. Investors, especially “dip buyers” who have their bags full at the time, appear to want to hold their coins.

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