On-chain data shows Bitcoin’s profit-taking volume has risen after the cryptocurrency’s price briefly broke above the $27,000 level.
Bitcoin Observed 2.4 Times Transfer Profit As Loss
According to data from an on-chain analytics company Holythis level of profit-taking has not been seen since December 2020. The relevant indicator here is the “daily on-chain transaction volume ratio in profit to loss,” As the name suggests, it measures the ratio between the Bitcoin volume of profit-taking transactions and transactions loss-taking.
This metric tells you whether there is more profit harvesting in the market than the realization of losses or not at the moment. The indicator has a positive value if the profit volume is higher. Otherwise, it is negative.
The indicator works through the on-chain history of each coin sold/transferred to see the price at the last time it was moved. If the previous selling price for any coin is less than the current BTC value, then this particular coin is moved at a profit, and thus, the transaction is calculated according to the profit volume. In addition, if the last price exceeds the latest value, the sale of the coin contributes to the lost volume.
Now, here is a graph showing the trend of daily on-chain transaction volume ratio in profit to loss for Bitcoin, as well as for Ethereum, over the past year:
The values of the two metrics seem to have been relatively high in recent days | Source: Santiment on Twitter
The graph above shows that Bitcoin’s profit-to-loss volume ratio has been on the rise in the last few days. With the latest surge in price above the level of $ 27,000 (which was only a moment before the coin fell back to the mark), the indicator has experienced a sharper surge.
In this surge, the metric has reached a value of about 1.4, indicating that the volume of transactions took profits about 2.4 times more than losses. The level of this indicator is the highest since December 2020, when the 2021 bull run is in its initial stage.
This high volume of profits would indicate that investors are afraid of the current downside, and therefore, they rush to take profits when the price breaks above the $27,000 level. The selling pressure from the profit takers is likely to pull back to the $26,000 level.
The graph shows that Ethereum’s profit volume has also increased significantly over the past few days. Still, the cryptocurrency has only seen the highest value of the indicator since mid-2023, and is only ahead of Bitcoin.
BTC price
At the time of writing, Bitcoin is trading around $26,800, up 34% over the past week.
It looks like the value of the asset has shot up over the past 24 hours | Source: BTCUSD on TradingView
Featured images from Kanchanara on Unsplash.com, charts from TradingView.com, Santiment.net