Bitcoin Holders Now Doing Loss-Taking: Sign That A Turnaround Is Near?
2024年8月20日 - 12:30PM
NEWSBTC
On-chain data shows that Bitcoin investors have ended their net
profit-taking spree recently, a potential sign that a price
reversal could occur soon. Bitcoin Daily Realized Profit Loss Ratio
Has Dipped Below 1 Recently As explained by CryptoQuant author Axel
Adler Jr in a new post on X, realized losses have started to exceed
profits recently. The on-chain metric of interest here is the
“Daily Realized Profit Loss Ratio,” which, as its name suggests,
tells us about how the Bitcoin investors’ profits compare against
the losses. The metric works by going through the transaction
history of each coin sold to see what price it was moved at before
this. If this previous selling price for any coin was less than the
current spot price, then that particular coin is being moved at a
profit. Related Reading: When To Be Bearish On Bitcoin? On-Chain
Analyst Answers Similarly, sales of coins of the opposite type lead
to loss realization. The indicator adds these profits and losses
for the entire market and takes their ratio to produce its value.
When the indicator is above 1, the investors realize more profits
than losses with their selling. On the other hand, this threshold
implies the dominance of loss-taking in the market. Now, here is a
chart that shows the trend in the Bitcoin Daily Realized Profit
Loss Ratio over the past few years: As displayed in the above
graph, the Bitcoin Daily Realized Profit Loss Ratio has mostly been
above 1 for the past year. Not just that, the indicator has been
significantly above the mark for a lot of this time, which suggests
profit realization has been quite notable. The reason behind this
is the appreciation the BTC price has enjoyed during this period.
From the chart, it’s visible that peak profit-taking coincided with
the all-time high (ATH) in March, as would be expected.
Interestingly, profit-taking still massively outweighed the
loss-taking in the months that followed the ATH, where BTC price
consolidated inside a range. It would appear that this appetite for
taking profits has run out recently, a potential result of the
sideways trajectory showing no signs of ending. The ratio has now
started to flip the other way, with losses taking center stage. The
analyst has noted that such a shift towards loss-taking generally
occurs at the end of consolidation periods. Related Reading:
Bitcoin “Still In A Bull Market,” Quant Says—Here’s Why So far, the
lowest the ratio has gone is 0.66, which is not too low compared to
past loss-taking events. Thus, the capitulation may deepen before
Bitcoin can start a fresh rally. BTC Price Bitcoin has recently
continued to be locked in a sideways trajectory as its price still
trades around $58,400. Featured image from Dall-E, CryptoQuant.com,
chart from TradingView.com
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