Bitcoin investors are seeing improved profitability as nearly 60% of the cryptocurrency’s circulating supply moves back into profit. However, on-chain analysis suggests the recovery remains fragile and could reverse if key market indicators fail to maintain their upward trend.

According to CryptoQuant, Bitcoin’s supply in profit climbed to 57.5% on July 22, up sharply from the 2026 low of 46.2% recorded on June 30. The improvement indicates that a growing share of BTC holders are now holding coins worth more than their acquisition price.

Despite the recovery, analysts caution that the current rebound does not yet confirm the beginning of a new bull market.

One of the key indicators being monitored is the Long-Term Holder Spent Output Profit Ratio (LTH-SOPR). The metric tracks whether long-term holders are generally moving their Bitcoin at a profit or loss. A value above 1 indicates that coins are predominantly being spent at a profit, while a reading below 1 can signal selling at a loss or capitulation.

CryptoQuant contributor thechessONCHAIN noted that previous Bitcoin bear-market recoveries have generally required both supply in profit to remain above 64% and the 30-day moving average of LTH-SOPR to stay above 1 for an extended period.

The current cycle has already seen one failed recovery attempt. Between April 28 and June 1, LTH-SOPR remained above 1 for 35 days, while Bitcoin supply in profit reached 67%. However, both indicators subsequently reversed, raising concerns that the latest recovery could face a similar outcome.

The 30-day average of LTH-SOPR has also remained below 1 for more than 50 days, highlighting continued pressure among long-term Bitcoin holders.

Bitcoin’s broader investment picture also remains mixed. Supply in loss crossed the 50% threshold in June, a level that has historically appeared near the final stages of major Bitcoin market bottoms. At the same time, weak spot-market demand has been offset to some extent by renewed institutional interest in Bitcoin.

For now, the improving supply profitability provides a positive signal, but analysts believe Bitcoin needs sustained strength in key on-chain metrics before a durable market recovery can be confirmed.