Historical Convergence of Bitcoin Profit and Loss Indicators Signals Market Reversal

As current market data draws attention, significant changes are occurring in Bitcoin’s supply and demand structure. According to the latest information provided by on-chain data analysis companies Glassnode and ChainCatcher, as of February 2026, the gap between the number of wallets holding profits and those holding losses is shrinking historically. This fluctuation in indicators suggests that market sentiment and investor judgment are at a major turning point, attracting the attention of many analysts.

Distribution of Bitcoin Holders’ Profits and Losses—Supply Indicators Showing a Balanced Situation

Analysis data from Glassnode reveals that the current BTC market is in an extremely unique phase. Approximately 11 million BTC are in profit, with their purchase costs below the current market price, while about 8.9 million BTC are in loss. The process of this gap gradually narrowing is what is referred to as the “convergence of supply” in the market.

Historically, when examining this indicator, situations where the ratio of profits to losses approaches balance are very rare, and such periods often mark important market turning points. These are closely related to the bottom formation phase in market capitalization stages and are considered potentially useful as long-term investment decision tools.

Market Cycle Theory and Bottom Formation Signals—Historical Significance of Convergence Patterns

In scenarios where the market exhibits convergence patterns, investor psychology tends to shift from two extreme states toward moderation. Some holders begin to recover from losses, and at the same time, selling pressure for profit-taking diminishes. When this equilibrium is established, it often indicates that the market is preparing for a new upward phase.

According to ChainCatcher’s analysis, if the supply of profits and losses continues to converge, it increases the likelihood that the market is entering the typical bottom formation stage of the Bitcoin cycle. Comparing this with historical cycle data, such supply convergence phases often precede market reboots.

Multiple Judgment Factors—The Role of Liquidity and Sentiment

However, industry warnings emphasize that relying solely on this indicator to judge market trends can be risky. The technical signal of supply convergence of profits and losses must be evaluated comprehensively alongside macro liquidity conditions, derivatives market structure, and overall market sentiment.

Understanding the current market situation from multiple perspectives—including shifts in market psychology, institutional fund flows, and external macroeconomic factors—is essential for making informed investment decisions. In other words, the convergence of Bitcoin’s profit and loss indicators functions only as part of a complex set of market signals.

If the supply convergence trend continues, it is highly likely that the overall market mechanism will stabilize at a bottom, but confirming this always requires multiple analytical viewpoints.