BTC: Profit-Rich Sell-Off Shows Leverage Risk

[Chawla Solutions]

Recent on-chain data from Glassnode reveals that Bitcoin’s latest sell-off happened while over 90% of the total BTC supply was still in profit. This sets it apart from historical capitulation events like those following the FTX or Luna collapses, when less than 65% of coins were profitable.

The data suggests that this was not a panic-driven market collapse, but rather a targeted deleveraging — a wave of liquidations hitting leveraged traders and large holders. The majority of realized losses came from whale-sized accounts, likely forced to unwind positions amid rising volatility and margin stress.

Interestingly, such conditions tend to mark structural corrections, not emotional sell-offs. With most holders still in profit, the broader investor base remains confident, showing resilience in the face of temporary price retracements. This also implies that Bitcoin’s long-term market health remains intact, as selling pressure originates mainly from leveraged traders rather than retail capitulation.

However, high profitability across supply can also signal market overheating — historically a precursor to short-term corrections.

Conclusion:
This was not a fear-based exodus but a leverage flush in an otherwise healthy market. As long as profit ratios remain elevated and losses are isolated to larger players, Bitcoin’s underlying strength continues to hold.