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The current Bitcoin price reflects conditions similar to the early 2022 sideways market, characterized by an increasing amount of supply in loss and diminishing profits for long-term holders, according to Glassnode.
Summary
- The cost basis model from Glassnode shows Bitcoin trading below crucial profitability quantiles of 0.75, 0.85, and 0.95, indicating that over 25% of the supply is currently at a loss.
- Currently, the Total Supply in Loss has risen to approximately 7.1 million BTC based on a 7-day moving average, aligning with the ranges observed during the sideways market in early 2022.
- The long-term holder SOPR has decreased to around 1.43 but remains above 1, indicating that older coins are still selling at a profit, albeit with narrowing margins.
According to Glassnode’s latest weekly report, the analytics firm has found parallels between the current Bitcoin price situation and that of the first quarter of 2022.
The analytics firm shared insights from its Supply Quantiles Cost Basis Model, which links price points to various degrees of investor profitability. This model tracks three supply quantiles: 0.75, 0.85, and 0.95. When Bitcoin reaches the 0.75 level, it indicates that 75 percent of the supply is in profit, while 0.85 and 0.95 correlate to 85 percent and 95 percent profitability, respectively.
Recent data from Glassnode reveals that Bitcoin has dipped below all three quantile thresholds, signifying that over 25 percent of its supply is experiencing losses. The firm suggests this sets the stage for either potential capitulation among recent buyers or the emergence of seller exhaustion leading to a market bottom. A similar drop below the 0.75 quantile occurred during the sideways market phase in early 2022, as detailed in the report.
The Total Supply in Loss metric, which assesses the quantity of Bitcoin in circulation held at a net unrealized loss, further supports this comparison. The 7-day moving average for Bitcoin’s Total Supply in Loss reached 7.1 million BTC last week, the highest since September 2023, as reported by Glassnode.
The firm indicated that the current range of supply in loss, fluctuating between 5 million and 7 million Bitcoin, closely mirrors levels seen during the early 2022 sideways market.
Additionally, the Spent Output Profit Ratio (SOPR) for long-term Bitcoin holders reflects similar market dynamics from the first quarter of 2022. This metric gauges whether Bitcoin investors holding for more than 155 days are selling at a profit or loss.
Although the long-term holder SOPR has sharply decreased in the recent weeks, it remains above 1, indicating ongoing profits for long-term holders, as per Glassnode’s findings. The current SOPR value of 1.43 shows a significant reduction in profit margins for this group of investors, the firm noted.
Market data indicates that Bitcoin has experienced a minor decline over the past 24 hours.
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