Bitcoin profit-taking transfers increase as BTC breaks $27,000
On-chain data shows that Bitcoin profit volume has shot up after the cryptocurrency’s price briefly broke above the $27,000 level.
Bitcoin observes 2.4 times as many profit transfers as losses
According to data from the analysis company at the chain Sentimentthis level of profit-taking has not been seen since December 2020. The relevant indicator here is the “Ratio of daily on-chain transaction volume in profit to loss,” As the name already suggests, it measures the ratio of the Bitcoin volume of profit-taking transactions to loss-making transactions.
This calculation tells us whether there is more profit harvesting in the market than loss realization or not right now. The indicator has a positive value if the profit volume is higher. Otherwise it is negative.
The indicator works by going through the chain of each coin being sold/transferred to see the price it was last moved to. If this previous sale price of a coin was less than the BTC value right now, this particular coin moved with profit and thus the transaction is counted under the profit volume. Similarly, if the last price exceeds the last value, the coin sale contributes to the lost volume.
Now, here’s a chart that shows the trend in the ratio of daily on-chain transaction volume in 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 graph above shows that the Bitcoin profit-to-loss volume ratio has been completely elevated in recent days. With the latest rise in price above the $27,000 level (which lasted only briefly before the coin fell back below the mark), the indicator has seen an even sharper top.
In this increase, the metric has achieved a value of around 1.4, which suggests that the profit-taking transaction volume is around 2.4 times more than the loss-making one. This indicator level is the highest since December 2020, when the 2021 bull run was in its initial phase.
This high profit volume suggests that investors fear downside right now, and so they rushed to reap some profits as soon as 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 figure shows that Ethereum’s profit taking volume has also risen significantly in recent days. Still, the cryptocurrency only observes the highest value of the indicator since mid-2023, and only a little further back than is the case for Bitcoin.
BTC price
At the time of writing, Bitcoin is trading around $26,800, up 34% in the last week.
It looks like the value of the asset has shot up over the past 24 hours | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, Charts from TradingView.com, Santiment.net
