The Percent Supply in Profit indicator is a metric that shows what percentage of the total supply of a cryptocurrency is in profit. This indicator works by calculating the percentage of coins moving above a certain price level. The Percent Supply in Profit indicator can be used to understand investor sentiment and selling pressure in the cryptocurrency market.
The indicator itself is calculated by looking at the total supply of a coin, then breaking it down into percentages of the number of coins that have moved more than a certain price level. These coins are then divided into two categories: coins that are in profit or coins that are in loss. The indicator will then take the total number of coins in each category and calculate a percentage.
The Percent Supply in Profit indicator can be a useful tool in understanding cryptocurrency market sentiment and determining when it may be time to exit a position. With enough practice and understanding of the indicator, traders and investors can use the PSP indicator to accurately predict market movements and make informed decisions.
How to Calculate Percent Supply in Profit ?
Formula:
Percent Supply in Profit = 100 * Supply in Profit / Total Supply
The Percent Supply in Profit formula is expressed as a percentage of supply in profit divided by total supply.
Critical Levels for Percent Supply in Profit
95% Value and Above: Looking at historical data, periods when 95% of the market was in profit may indicate ATH (All-time high) levels.
50% Value and Below: When less than 50% of the BTC in the market is in profit, there are buying opportunities, and these levels can often indicate bottoms.
Critical levels for Percent Supply in Profit indicator on Glassnode
The value of the Percent Supply in Profit indicator at the ATH levels of certain period
Usage in the Traderlands Strategy Creator:
Rules you can add to the enter algorithm section
The above rules are used to examine the change in value of the Percent Supply in Profit indicator in order to find the points where there may be trading opportunities. The indicator is set to buy when the indicator value decreases by more than -3% for the previous candle and increases by more than 0.3% for the live candle.
The desired negative value change in the previous candle was prepared with the interpretation that Bitcoins in the supply have lost a certain amount, meaning that buying opportunities have occurred.
Rules You Can Add to the Exit Algorithm Section
With the above rule, the Percent Supply in Profit indicator is set to be triggered on possible declines after a entered position.
Backtest Results:
Leverage is set at 5x. Results for the 1-year BTC/USDT pair
WARNING: The entry and exit strategies in the images are for educational purposes to explain the indicators. They do not guarantee any profit.
When creating an Algorithmic Trading strategy, multiple indicators are usually linked together to form a set of rules.
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