Bitcoin Supply in Profit/Loss: A Market Cycle Indicator¶

Summary (English)¶

Benjamin Cowan presents the "Bitcoin percentage of supply in profit and loss" as a simple but effective market cycle indicator: when the profit and loss supply lines converge (approximately 50/50 split), it has historically marked cycle bottoms with remarkable consistency since 2011. He predicts this convergence will occur again in late 2026, signaling the end of the current cycle's correction phase.

The Indicator Mechanics¶

What it measures: - Supply in profit: Percentage of total BTC supply currently held above its acquisition price - Supply in loss: Percentage held below acquisition price - The two percentages always sum to 100%

Why it works: When Bitcoin hits all-time highs, nearly 100% of supply is in profit (everyone who ever bought is winning). As price drops from peaks, more holders go underwater, and the profit percentage declines toward 50%. When the lines converge around 50/50, it means roughly half of all Bitcoin holders are losing money—historically the point of maximum pain and capitulation.

Current state (as of video): - 74.3% of supply in profit - 25.7% of supply in loss - Recently dropped from higher levels as Bitcoin declined from recent highs

Historical Validation: Five Cycle Bottoms¶

The indicator has successfully identified every major Bitcoin cycle bottom since 2011:

2011 bottom: - Supply profit/loss converged near 50/50 - Marked the end of Bitcoin's first major correction

2014-2015 bottom: - Convergence occurred at the end of 2014/beginning of 2015 - Aligned with the pre-halving year bottom - Bottom range: supply in profit between 35-45%

2018 bottom: - Convergence at end of 2018 - Classic midterm election year bottom pattern - Again, profit percentage dropped to 35-45% range

March 2020 COVID crash: - Even the flash crash showed convergence - When lines met, that was the bottom - Recovery was swift but the signal was accurate

2022 bottom: - Convergence at end of 2022 - Most recent validation of the pattern - Cowan highlighted this chart throughout 2022 in real-time - Bottom profit percentage: ~40%

Pattern: In all five cases, when the 30-day moving average of supply in profit dropped to the 35-45% range and converged with supply in loss, a cyclical bottom followed.

The Bottom Range: 35-45% Supply in Profit¶

Historically, Bitcoin cycle bottoms occur when: - Supply in profit: 35-45% - Supply in loss: 55-65% - This means more than half of all holders are underwater

Why this matters: - Maximum psychological pain - Capitulation from weak hands - Strong hands accumulating at depressed prices - Sets the stage for the next cycle

Current distance from bottom: - Currently at 74.3% profit → need to drop ~30-40 percentage points - Recent drop from highs to 62% shows the process has begun - Still considerable distance to historical bottom range

Why It Doesn't Work for Tops¶

Cowan emphasizes this is not a top indicator, and here's why:

In bull markets: - Supply in profit can stay near 100% for months or years - Bitcoin can continue making new all-time highs indefinitely during this period - There's no predictive value in observing "supply is 100% profitable" when that's obvious

Example from current cycle: - 2021: Supply profit stayed elevated despite mid-cycle pullback - Technically made new all-time high later in 2021 - The high profit percentage persisted throughout

The asymmetry: - Bottoms are sharp and convergent (profit/loss lines meet quickly) - Tops are extended and sustained (profit line stays high for long periods) - Therefore: useful for identifying lows, not highs

The 2026 Midterm Year Pattern¶

Historical context: Bitcoin tends to reset in midterm election years (2014, 2018, 2022). These years consistently produce cycle lows before the next halving-driven rally.

Cowan's 2026 prediction: 1. Lower high: Price will make a high that's lower than previous cycle peak 2. Counter-trend rally: After initial drop, there will be a bounce 3. Lower low: The rally fails and price drops to new cycle low 4. Convergence by year-end: Supply profit/loss lines meet around late 2026

Why he expects this: - Pattern has held for three consecutive midterm years - Current market structure resembles pre-convergence setups - 30-day moving averages are beginning to trend toward each other

What would invalidate the thesis: - If convergence happens much sooner (mid-2026 instead of late 2026) - If Bitcoin makes a sustained new all-time high in 2026 without convergence - Either would suggest a different cycle structure than historical pattern

Cycle Dynamics: The Drop-Rally-Drop Pattern¶

Looking at the historical charts with 30-day moving averages reveals a consistent pattern:

Phase 1: Initial drop from peak - Supply in profit begins declining from ~95-100% - First move down is often sharp and panicky - Profit percentage might drop to 60-70%

Phase 2: Counter-trend rally - Market bounces as some buyers step in - Supply in profit recovers partially (maybe back to 70-80%) - This creates false hope that the correction is over

Phase 3: Final capitulation - Rally fails and market grinds lower - Supply in profit drops to 35-45% (the convergence zone) - This is the actual cycle bottom

Exception: 2021 cycle - Didn't follow this exact pattern as cleanly - Had a dip to lower profit levels mid-cycle - Still technically made new ATH afterward (though "fleeting" as Cowan notes) - Suggests the pattern isn't perfectly mechanical

Practical Application: Don't Try to Time It Perfectly¶

Cowan's advice: - You don't need to "sit here and try to time it perfectly" - The indicator is for identifying the general region of bottoms - When you see convergence in late 2026, recognize it as historically significant

How to use it: - Monitor the chart as the year progresses - If by Q4 2026 the lines are converging toward 50/50, prepare for accumulation - Don't wait for exact bottom—act when you see the convergence pattern forming

Risk management: - This is one indicator among many - "All models are wrong, some are useful" (Cowan's quote) - Use it as context for other analysis, not as sole decision driver

The "Super Cycle" Narrative¶

Cowan briefly addresses the "super cycle" narrative (the idea that this cycle will be different and Bitcoin won't have a major correction):

His take: - A lot of the super cycle talk comes from people who bought altcoins instead of Bitcoin - They "feel like the market owes them something" - They want to believe a different outcome will happen

His focus: - He looks at Bitcoin specifically, not cherry-picked altcoins - Individual alts can always go to new highs in any year (some already have in 2025) - But Bitcoin's cycle structure has been remarkably consistent - No reason to expect deviation from historical pattern

Implication: The supply profit/loss convergence will likely happen in 2026 just as it did in previous midterm years, regardless of narratives about "this time is different."

Aesthetically Pleasing Cyclicality¶

Cowan notes that one appeal of this indicator is how visually clear the cycles are:

What you see: - Clean oscillations between extremes - Profit trending to 100% at tops (all green) - Convergence to 50/50 at bottoms (balanced) - Then the cycle repeats

Why this matters: - Easy to understand without complex technical knowledge - Visually intuitive (you can see the cycles at a glance) - Memorable pattern (once you see it, you recognize it in future)

Contrast with other indicators: - Many on-chain metrics are noisy or hard to interpret - This one has clean signal at the critical moments (bottoms) - Even if imperfect, its simplicity makes it actionable

Limitations and Caveats¶

Not a crystal ball: - Past performance doesn't guarantee future results - Bitcoin's market structure could evolve - Institutional adoption, ETFs, macroeconomic factors could alter patterns

Doesn't tell you the price: - Convergence says "this is near the bottom" - Doesn't tell you if that bottom is $40k, $50k, or $60k - Still need price analysis for entry points

Lagging, not leading: - You only confirm convergence after it happens - Can't predict exact timing weeks in advance - Better for confirming bottoms than predicting them

Works best on longer timeframes: - Designed for 4-year cycle structure - Less useful for short-term trading - May miss intra-cycle opportunities

The Meta-Lesson: Cycle Awareness¶

The deeper insight isn't just about this specific indicator—it's about thinking in cycles.

What Cowan is really teaching: - Bitcoin has a 4-year cycle driven by halvings and election years - These cycles produce predictable psychological patterns - Indicators like supply profit/loss reveal those patterns - If you understand the cycle, you can position accordingly

Practical wisdom: - Don't fight the cycle (trying to buy tops or sell bottoms) - Recognize where you are in the cycle (currently mid-to-late cycle based on profit %) - Prepare for what historically comes next (convergence and capitulation)

Long-term thinking: - If you're bullish on Bitcoin long-term, cycle bottoms are accumulation opportunities - The pain of watching profit percentage drop to 40% is the price of conviction - Those who bought at previous convergences (2014, 2018, 2022) were rewarded

總結（繁體中文）¶

Benjamin Cowan 介紹「Bitcoin 供應量盈虧比」作為簡單但有效的市場週期指標：當盈利供應量與虧損供應量的線條收斂（大約 50/50 分割）時，自 2011 年以來歷史上都以驚人的一致性標記了週期底部。他預測這個收斂會在 2026 年底再次出現，標誌著當前週期修正階段的結束。

指標機制¶

測量什麼： - 盈利供應量： 目前持有價格高於取得成本的 BTC 總供應量百分比 - 虧損供應量： 持有價格低於取得成本的百分比 - 兩個百分比總和永遠是 100%

為什麼有效： 當 Bitcoin 達到歷史新高時，近 100% 的供應量處於盈利（每個曾經買過的人都在賺錢）。當價格從高峰下跌時，更多持有者虧損，盈利百分比下降到 50% 附近。當線條在 50/50 附近收斂時，意味著大約一半的 Bitcoin 持有者在虧損——歷史上這是最大痛苦和投降的點。

當前狀態（影片時）： - 74.3% 供應量在盈利 - 25.7% 供應量在虧損 - 最近從更高水平下降，因為 Bitcoin 從近期高點回落

歷史驗證：五個週期底部¶

這個指標成功識別了自 2011 年以來每個主要的 Bitcoin 週期底部：

2011 底部： - 供應量盈虧在 50/50 附近收斂 - 標記了 Bitcoin 第一次主要修正的結束

2014-2015 底部： - 收斂發生在 2014 年底/2015 年初 - 與減半前一年的底部一致 - 底部範圍：盈利供應量在 35-45%

2018 底部： - 2018 年底收斂 - 經典的中期選舉年底部模式 - 再次，盈利百分比下降到 35-45% 範圍

2020 年 3 月 COVID 暴跌： - 即使是閃電崩盤也顯示收斂 - 當線條相遇時，那就是底部 - 恢復迅速，但信號準確

2022 底部： - 2022 年底收斂 - 最近的模式驗證 - Cowan 在整個 2022 年即時強調了這個圖表 - 底部盈利百分比：~40%

模式： 在所有五種情況下，當供應量盈利的 30 天移動平均線下降到 35-45% 範圍並與虧損供應量收斂時，隨後出現週期底部。

底部範圍：35-45% 供應量在盈利¶

歷史上，Bitcoin 週期底部發生在： - 盈利供應量： 35-45% - 虧損供應量： 55-65% - 這意味著超過一半的持有者都虧損

為什麼這很重要： - 最大心理痛苦 - 弱手投降 - 強手在低價累積 - 為下一個週期奠定基礎

當前離底部的距離： - 目前在 74.3% 盈利 → 需要下降約 30-40 個百分點 - 最近從高點下降到 62% 顯示過程已經開始 - 離歷史底部範圍仍有相當距離

為什麼它不適合抓頂¶

Cowan 強調這不是頂部指標，原因如下：

在牛市中： - 盈利供應量可以在接近 100% 停留數月或數年 - Bitcoin 可以在這段期間無限期地繼續創新高 - 觀察「供應量 100% 盈利」沒有預測價值，因為這很明顯

當前週期的例子： - 2021: 盈利供應量在週期中期回調期間仍保持高位 - 技術上在 2021 年晚些時候創了新高 - 高盈利百分比貫穿始終

不對稱性： - 底部是尖銳且收斂的（盈虧線快速相遇） - 頂部是延伸且持續的（盈利線長期保持高位） - 因此：有助於識別低點，而非高點

2026 中期選舉年模式¶

歷史背景： Bitcoin 傾向在中期選舉年（2014、2018、2022）重置。這些年份一致地在下一次減半驅動的反彈之前產生週期低點。

Cowan 的 2026 預測： 1. 更低的高點： 價格會創下低於前一週期峰值的高點 2. 反趨勢反彈： 初始下跌後會有反彈 3. 更低的低點： 反彈失敗，價格下跌到新的週期低點 4. 年底收斂： 盈虧供應量線在 2026 年底附近相遇

為什麼他預期這樣： - 模式在連續三個中期選舉年保持不變 - 當前市場結構類似收斂前的設置 - 30 天移動平均線開始相互趨向

什麼會使論點失效： - 如果收斂發生得更早（2026 年中而非晚） - 如果 Bitcoin 在 2026 年創下持續的新高而沒有收斂 - 任何一種情況都暗示與歷史模式不同的週期結構

週期動態：下跌-反彈-下跌模式¶

查看帶有 30 天移動平均線的歷史圖表揭示了一個一致的模式：

階段 1：從峰值初始下跌 - 盈利供應量開始從 ~95-100% 下降 - 第一次下跌通常是尖銳和恐慌的 - 盈利百分比可能下降到 60-70%

階段 2：反趨勢反彈 - 市場反彈，因為一些買家進場 - 盈利供應量部分恢復（可能回到 70-80%） - 這造成修正結束的虛假希望

階段 3：最終投降 - 反彈失敗，市場持續走低 - 盈利供應量下降到 35-45%（收斂區） - 這是實際的週期底部

例外：2021 週期 - 沒有完全遵循這個確切模式 - 週期中期盈利水平有下降 - 之後仍然技術上創了新高（雖然 Cowan 指出是「短暫的」） - 表明模式不是完全機械的

實際應用：不要試圖完美計時¶

Cowan 的建議： - 你不需要「坐在這裡試圖完美計時」 - 這個指標是用來識別底部的一般區域 - 當你在 2026 年底看到收斂時，認識到這在歷史上很重要

如何使用： - 隨著年份推進監控圖表 - 如果到 2026 年第四季線條收斂到 50/50，準備累積 - 不要等待確切底部——當你看到收斂模式形成時就行動

風險管理： - 這是眾多指標之一 - 「所有模型都是錯的，有些是有用的」（Cowan 的引用） - 將其作為其他分析的背景，而非唯一決策驅動因素

「超級週期」敘事¶

Cowan 簡要地談到「超級週期」敘事（這個週期會不同，Bitcoin 不會有大幅修正的想法）：

他的看法： - 很多超級週期的討論來自那些買了山寨幣而非 Bitcoin 的人 - 他們「覺得市場欠他們什麼」 - 他們想相信會有不同的結果

他的重點： - 他專門看 Bitcoin，而非精選的山寨幣 - 個別山寨幣總能在任何年份創新高（2025 年已經有一些） - 但 Bitcoin 的週期結構一直非常一致 - 沒有理由期待偏離歷史模式

含義： 盈虧供應量收斂很可能在 2026 年發生，就像以前的中期選舉年一樣，不管關於「這次不同」的敘事如何。

美學上令人愉悅的週期性¶

Cowan 指出這個指標的一個吸引力是週期有多視覺上清晰：

你看到的： - 極端之間的清晰振盪 - 頂部時盈利趨向 100%（全綠） - 底部時收斂到 50/50（平衡） - 然後週期重複

為什麼這很重要： - 無需複雜的技術知識就能理解 - 視覺直觀（一眼就能看到週期） - 可記憶的模式（一旦你看到它，你在未來就能識別它）

與其他指標的對比： - 許多鏈上指標是嘈雜的或難以解釋的 - 這個在關鍵時刻（底部）有清晰的信號 - 即使不完美，其簡單性使其可操作

限制和警告¶

不是水晶球： - 過去的表現不保證未來結果 - Bitcoin 的市場結構可能演變 - 機構採用、ETF、宏觀經濟因素可能改變模式

不告訴你價格： - 收斂說「這接近底部」 - 不告訴你底部是 $40k、$50k 還是 $60k - 仍需要價格分析來確定入場點

滯後，而非領先： - 你只能在收斂發生後確認 - 無法提前幾週預測確切時機 - 更適合確認底部而非預測

在較長時間框架上效果最好： - 為 4 年週期結構設計 - 對短期交易不太有用 - 可能錯過週期內的機會

元教訓：週期意識¶

更深層的洞察不僅僅是這個特定指標——而是以週期思考。

Cowan 真正在教的： - Bitcoin 有一個由減半和選舉年驅動的 4 年週期 - 這些週期產生可預測的心理模式 - 像盈虧供應量這樣的指標揭示了這些模式 - 如果你理解週期，你就可以相應地定位

實用智慧： - 不要對抗週期（試圖買頂或賣底） - 認識你在週期中的位置（基於盈利 % 目前處於週期中後期） - 為歷史上接下來會發生的事做準備（收斂和投降）

長期思考： - 如果你長期看多 Bitcoin，週期底部是累積機會 - 看著盈利百分比下降到 40% 的痛苦是信念的代價 - 那些在以前的收斂點（2014、2018、2022）買入的人得到了回報

Key Quotes¶

"All models are wrong, some are useful."

"This is an aesthetically pleasing way to look at Bitcoin through the lens of its market cycles."

"When you look at Bitcoin through the market cycles, you will notice that the supply in profit and loss when it converges tends to occur around the time of the bottom."

"Usually where this bottoms, if you look at the percentage of supply in profit historically, it has bottomed somewhere between around let's call it 36% up to about 45%."

"I think when you look at a chart like this going into the midterm year, it makes sense to assume that this will yield a lower high that will then go into a lower low."

"Just remember if you're sitting around here and if later this year these charts have converged... just remember that historically that will have been a good indicator for getting us close to wherever the market cycle low for Bitcoin is."

On-Chain Metrics - Data derived from blockchain that reveals holder behavior
Supply in Profit/Loss - Percentage of total supply held above/below acquisition cost
Four-Year Cycle - Bitcoin's historical pattern of bull/bear markets aligned with halvings
Midterm Election Year - Years (2014, 2018, 2022, 2026) that tend to produce cycle lows
Convergence - When profit and loss supply lines meet around 50/50
Capitulation - Period of maximum pain when weak hands sell to strong hands
Counter-Trend Rally - Temporary bounce within a larger downtrend
Moving Average - Smoothed indicator that filters short-term noise