On-chain data shows the Bitcoin Profitability Index is at 202% right now. Here\u2019s how this compares with past bull runs of the asset.<\/p>\n
In a new post<\/a> on X, CryptoQuant author Axel Adler Jr. discussed the latest trend in the Average Profitability Index of Bitcoin. The \u201cAverage Profitability Index\u201d is an on-chain indicator that tells us about how the spot price of the asset compares against its realized price.<\/p>\n The \u201crealized price<\/a>\u201d here is a measure of the cost basis of the average investor or address on the Bitcoin network. The Average Profitability Index is calculated as a percentage, with the 100% mark corresponding to the spot price being equal to the realized price.<\/p>\n When the value of this indicator is greater than 100%, it means the asset is currently trading above the cost basis of the average investor, so the overall market could be assumed to be in a state of profit. On the other hand, it being under this cutoff suggests the holders as a whole are carrying their coins at a net unrealized loss.<\/p>\n Now, here is a chart that shows the trend in the Bitcoin Average Profitability Index over the past decade:<\/p>\n As displayed in the above graph, the Bitcoin Average Profitability Index has been above 100% since last year, which suggests the investors as a whole have been enjoying profits.<\/p>\n The indicator\u2019s value had spiked to particularly high values earlier in this year when the rally towards the new all-time high (ATH)<\/a> had occurred. With the latest recovery run that the coin has seen, the indicator has been picking up once again, although it\u2019s still a notable distance away from the level seen during the ATH.<\/p>\n At present, the BTC Average Profitability Index is floating around 202%, which implies the spot price is double that of the realized price. Historically, the indicator reaching extreme levels has generally led to tops for the asset.<\/p>\n This is because the investors\u2019 temptation to participate in profit-taking increases the larger their gains. \u201cWhen the index rises above 300%, investors are likely to start taking profits actively,\u201d notes the analyst.<\/p>\n