Bitcoin Signal Emerges Following Drawdown of Over 40%: Historical Gains Across All Four Timeframes

For the first time since January 2023, Bitcoin has triggered a supply profitability signal associated with recoveries following drawdowns deeper than 40%, and historical comparisons point toward stronger results across all four timeframes.

Glassnode announced that a Supply Profitability Crossing has been triggered, occurring when the portion of Bitcoin supply in profit once again exceeds the profit share of long-term holders. The indicator is used to track recoveries following bear market periods.

This event marks the first trigger since January 2023 observed after a drawdown deeper than 40%. Long-term holders refer to the investor group that holds Bitcoin for an extended period without moving it. The signal compares this group’s share in profit with the overall profitability rate of the total Bitcoin supply.

Bitcoin signal historically associated with higher returns

In 16 out of 17 completed events, the median return following the signal exceeded the median performance of all days. Median refers to the middle value that reduces the impact of extreme outliers. The post-signal return was 12% in 1 month, 22% in 3 months, 47% in 6 months, and 127% in 1 year. During the same timeframes, the median returns for all days remained at 2%, 6%, 23%, and 63%, respectively. In indexed price paths, the post-crossing median line also trended above the general median around day 365, reaching approximately the 280 level.

Glassnode also performed a comparison with a control group consisting of similar periods in terms of drawdown depth and supply profitability. The signal yielded higher results in all four timeframes: 8.3% vs. 1.3% in 1 month, 19.1% vs. 6.5% in 3 months, 38.5% vs. 26.6% in 6 months, and 122.8% vs. 99% in 1 year.

Past median returns do not guarantee that the same performance will repeat in the future; the signal alone does not offer a definitive confirmation of a bullish trend.