On-chain data shows the Bitcoin (BTC) sell-side danger ratio has approached all-time bottom Line recently, a sign that a big move may be coming for the coin.
Bitcoin (BTC) Sell-Side Danger Ratio Has Observed A Plunge Recently
As already stated out by the lead on-chain analyst at Glassnode in a Tweet, Bitcoin sellers may have become exhausted recently. The “sell-side danger ratio” is an indicator that measures the ratio betwixt the sum of all profits and losses being discovered in the Bitcoin (BTC) market and the discovered cap.
The “ discovered cap” here refers to the capitalization model for Bitcoin (BTC) that calculates a sort of “true” value for the digital currency by assuming that each coin in the supply is not worth the same as the present spot price, but the price at which it was last moved.
As the profits and losses being harvested in the market are nothing but a measure of the selling pressure in the market, this indicator tells us how the selling pressure (or the sell-side risk) looks like relative to the value of the digital currency (the discovered cap).
And once the value of this indicator is high, it means the investors are taking part in a high amount of profit/loss realization at this time. Such a market is usually high danger, as the price tends to be more volatile during periods with these values.
On the other hand, low values imply the holders are reluctant to sell as of now. These conditions traditionally occur when the market has calmed down and accumulation tends to take place in such periods.
Now, here is a chart that shows the tendency in the Bitcoin (BTC) sell-side danger ratio over the history of the cryptocurrency:
As shown in the over graph, the Bitcoin (BTC) sell-side danger ratio has seen a sharp plunge recently, a sign that there is little profit or loss realization going in the market right now.
The indicator is now below the “low value realization” line that the analytics company has defined (colored in red in the chart). Historically, whenever the metric has plunged into this zone, the market has built up towards a sizeable move in the price.
Since such low values of the indicator imply the lack of sellers in the market, the common expectation could be that this can be a positive tendency sign. Nonetheless, as is visible from the graph, this hasn’t necessarily been the case.
Both positive tendency and bearish price action has took place following the formation of this pattern. Just back in March of in the year, the indicator had shown this tendency, but the digital currency had followed up with a sharp correction.
Breaks into the high value realization zone (that is, the condition where there is a large amount of selling going on), though, have traditionally always been bearish for Bitcoin.
As the indicator has once more dipped into the low value realization area, it’s possible that a large move in the price may follow soon. Despite the fact that it’s uncertain which direction exactly this volatility can potentially go.
At the time of publication, Bitcoin (BTC) is trading around $26,100, down 2 percent in the last week.