Bitcoin, Ethereum, and XRP Flash On-Chain Warning Signs

Warning signals flash as Bitcoin, Ethereum, and XRP defy historical averages, posing a looming threat of a potential mass selloff.

Astronaut holding a red flare in a ruined looking landscape with a red declining line chart in the distance.
  • Bitcoin, Ethereum, and XRP have been trading in a “high-risk zone.”
  • The “Percent of Total Supply in Profit” metric has suggested a potential upcoming market shift.
  • The data hasn’t prophesied a crash, but the red flags are unmissable.

The three biggest cryptocurrencies – Bitcoin, Ethereum, and XRP – are currently flashing warning signs, according to data from on-chain analytics firm Santiment. The indicator raising eyebrows is the “Percent of Total Supply in Profit,” which tracks the percentage of a cryptocurrency’s circulating supply currently sitting in profit.

On-Chain Data Suggests Caution

With all three major coins exceeding their historical averages in this metric, concerns are mounting that a mass selloff could be on the horizon. Investors often take profits when their holdings are in the green, and with a large portion of the supply currently profitable, the temptation to sell may become irresistible.

Historically, Bitcoin, Ethereum, and XRP have averaged between 55% and 75% of their supply in profit. All three sit above this range, firmly within what Santiment defines as the “high-risk zone.” 

While external factors like increased exposure from ETFs could still push prices higher in the short term, Santiment emphasizes that a drop below 75% supply in profit would be a “great signal,” indicating continued long-term growth.

Currently, 84% of Ethereum’s supply and 83% of Bitcoin’s are in the green, with XRP trailing slightly behind at 81%. Historically, these figures have often preceded significant selloffs, as investors holding profitable positions become more likely to cash out.

While this data doesn’t guarantee an imminent crash, it does raise a red flag for investors. With a large portion of each asset’s supply already in profit, the potential for a mass selloff is heightened. This is especially true if broader market conditions turn sour or negative news specific to any of the three cryptocurrencies emerges.

On the Flipside

  • They posit that, as facilitated by ETFs, institutional interest might steer prices upward despite the elevated profit percentages.
  • Not every instance of high-profit percentages has resulted in significant selloffs as the crypto market is influenced by multifaceted factors, making it challenging to predict a uniform outcome based on this metric.

Why This Matters

The current high levels of “Percent of Total Supply in Profit” suggest a heightened risk of price corrections for Bitcoin, Ethereum, and XRP. While not a definitive prediction of a downturn, this metric is a valuable indicator for investors to watch as they navigate the ever-volatile world of cryptocurrencies.

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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.