Bitcoin Profit-Taking Transfers Spike As BTC Breaks $27,000
On-chain data shows that Bitcoin’s profit volume soared after the cryptocurrency’s price briefly breached the $27,000 level.
Bitcoin Sees 2.4 Times More Profit Transfers Than Losses
According to data from on-chain analytics firm Holythis level of profit taking has not been seen since December 2020. The relevant indicator here is the “ratio of daily volume of on-chain transactions to profit and loss”. profit-making operations and loss-making operations.
This metric tells us whether there is more profit taking in the market than loss taking or not right now. The indicator has a positive value if the profit volume is higher. Otherwise it is negative.
The indicator works by scrolling through the chain history of each currency being sold/transferred to see the price at which it was last moved. If the previous sale price of any coin was less than the value of BTC at the time, that particular coin was profitably moved and therefore its transaction is counted in the profit volume. Likewise, if the last price exceeds the last value, selling the coin contributes to the lost volume.
Now, here’s a graph that shows the trend in the ratio of daily on-chain transaction volume to profit and 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 chart above shows that Bitcoin’s profit to loss volume ratio has been all the way up over the past few days. With the last rise in price above the $27,000 level (which only lasted for a brief period before the coin dropped below the mark), the indicator recorded an even sharper rise.
In this increase, the metric reached a value of around 1.4, suggesting that the volume of profitable transactions is about 2.4 times greater than the loss. This level of the indicator is the highest since December 2020, when the 2021 bull run was in its early stages.
This high profit volume suggests that investors are fearful of declines now and therefore they rushed to grab some profits once the price broke above the $27,000 level. Selling pressure from these profit takers was likely behind the pullback to the $26,000 level.
The graph shows that Ethereum’s profit-taking volume has also increased significantly over the past few days. Still, the cryptocurrency is only seeing the highest value of the indicator since mid-2023, and only slightly further behind than in the case of Bitcoin.
BTC price
At the time of writing, Bitcoin is trading around $26,800, up 34% over the last week.
It looks like the value of the asset has shot up over the past 24 hours | Source: BTCUSD on TradingView
Kanchanara featured image from Unsplash.com, charts from TradingView.com, Santiment.net