On-Chain Data School (5): How Many People Are Actually Making Money? A Guide to the Objective Sentiment Indicator PSIP
TechFlow Selected TechFlow Selected
On-Chain Data School (5): How Many People Are Actually Making Money? A Guide to the Objective Sentiment Indicator PSIP
PSIP = The percentage of circulating BTC that is in a profitable position.
Navigating Web3 tides with focused insightsAuthor: Mr. Berg
🔸TL;DR
- This article introduces PISP, an on-chain metric.
- PSIP = Percentage of circulating BTC that is currently in profit.
- It can serve as a market sentiment indicator, useful for both topping-out and bottoming-out signals.
🟡 Introduction to PSIP
PSIP stands for Percent Supply In Profit, defined as "the percentage of circulating BTC that is currently in a profitable position."
The calculation works by comparing the current price with the last transfer price of each individual BTC to determine whether it is in profit or at a loss.
If the current price is higher than the last transfer price of a specific BTC unit, that unit is counted as being in profit—otherwise, it is considered at a loss.
(PSIP Chart)
🟡 What if most coins are underwater?
One application of PSIP is identifying buying opportunities ("buying the dip"). When the majority of coins are in a loss-making position, market sentiment is typically at its lowest, significantly reducing holders' willingness to sell. This often presents a favorable opportunity to accumulate.
As shown in the chart below, I've marked historical BTC price levels corresponding to periods when PSIP was below 50%.
The results demonstrate that PSIP performs quite well as a bottoming indicator.
(BTC Price vs. PSIP < 50%)
🟡 What if most coins are in profit?
As illustrated below, since the maximum value of PSIP is capped at 100%, it's difficult to use PSIP alone to identify market tops.
That said, there are indeed methodologies using PSIP to detect potential tops—for example, monitoring the correlation between "PSIP and price changes" over specific time windows.
However, this aspect is considerably more complex, so I'll save it for a future discussion!
(PSIP peaks at 100% and cannot solely identify market tops)
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
@market_beggar
