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Bitcoin has seen a bouncing again in the past day, which contributes to the recent series of rebounds. This is what data on the chains says about whether BTC is going with them somewhere.
Bitcoin realized that the profit/loss ratio could shed light on a broader dynamic
In the last weekly report, the on-chain Analytics company Glass node Discussed about the recent trend in the realized profit/loss ratio for Bitcoin, which is an indicator that can be useful to study how investors respond to price volatility.
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The metric measures, as the name suggests, the relationship between the amount of profit and that of loss that is realized by the holders or addresses as a whole.
The indicator works by looking at the transaction history of each coin that is sold on the network to find in what price it was transferred prior to this sale. If this earlier sales value is lower than the latest spot price for each token, the metric includes it under the profit volume.
The total profit realized in the sale of the currency is supposed to be the same as the difference between the two prices. The indicator calculates this value for all coins that belong to the profit volume and takes a total amount to determine the scale of profit realization in the blockchain.
Similarly, the realized profit/loss ratio also finds the total number of loss that is realized by referring to the sale of the coins of the opposite type (that is, the tokens with the last transaction value higher than the current spot price). Subsequently, it is necessary for the relationship between the two amounts to estimate the net situation for the sector.
During the last few months Bitcoin has undergone a phase of Beerarish pricing. This is how investor trade behavior was during this period, according to the realized profit/loss ratio:
As the analysis company has emphasized in the graph, the indicator saw dips under 1 Mark during each of the recent lows. A value in this region corresponds to taking a loss that is more dominant than taking a profit.
“This imbalance usually marks a certain degree of depletion of the seller, whereby the downward momentum fades when the pressure-side pressure is absorbed,” Glassnode explains. For this reason, capitulation helps to arrive at local soils.
From the graph it is visible that the cryptocurrency also benefited from this effect during the recent outbursts of loss realization, because his prize found a rebound after each of them.
However, these Bitcoin Rebounds have not been running out until now. Will they eventually culminate in a return of the right bullish momentum, or are they only dead cats bouncers on their way down? To tackle the question, the analysis company has referred to a long -term display of the realized profit/loss ratio.
As shown in the graph above, the 90-day simple advancing average (SMA) of the Bitcoin has been realized that the profit/loss ratio has recently been punished strongly, despite the jumps in profit statement that have come in the short term.
“These short profit-driven peaks have not succeeded in turning the wider downward trend, which suggests that the macro image remains one of the generally weaker liquidity and the profitability of investors deteriorates,” Glassnode notes.
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So when it comes to whether Bitcoin witnessed a shift to Bullish Momentum with the recent rebounds, the answer is apparently no, at least from the perspective of the profit/loss ratio.
BTC price
At the time of writing, Bitcoin acts around $ 83,600, a decrease of almost 2% in the last seven days.
Featured image of Dall-e, Glassnode.com, Graph of TradingView.com
