Bitcoin Profit-Taking Volume Surges as Price Rises
Recent on-chain data from Santiment reveals that investors are capitalizing on the latest surge in cryptocurrency prices by taking profits. This is evident from the ratio of daily on-chain transaction volume in profit to loss, which measures the volume of profit-taking compared to loss-taking in the market. When this indicator is above zero, it suggests that profit-taking is dominant among investors.
To determine profit-taking and loss-taking volumes, the indicator analyzes the historical on-chain data of each coin sold or transferred on the network. If the selling price of a coin was lower than its current spot price, it contributes to the profit-taking volume.
Chart Shows Bitcoin Profit-Taking Indicator Over Past Month
The chart provided by Santiment displays the changes in the Bitcoin profit-taking indicator over the past month. It indicates that profit-taking has been increasing steadily, surpassing loss-taking volumes. This suggests that investors are cashing out on their gains during this period of consolidation.
In addition to the profit-taking indicator, Santiment also includes data for active addresses. This metric tracks the total number of addresses involved in transfer activity on the blockchain daily. The high values observed recently indicate significant trader attention towards Bitcoin.
Impact on BTC Price
Despite the presence of sellers in the market, the high level of activity could also indicate strong buyer interest. It remains to be seen whether profit-takers will push the price down or if buyers will counter their actions and maintain upward momentum.
Currently, Bitcoin reached a peak of $26,700 before retracing below $26,500 today.
Hot Take: Bitcoin Profit-Taking on the Rise
The surge in Bitcoin prices has led to an increase in profit-taking volumes among investors. As the profit-taking indicator surpasses loss-taking volumes, it indicates a growing trend of investors cashing out on their gains. This behavior could potentially create resistance to further price surges. However, the high level of activity and attention from traders suggest that there is also strong buyer interest in Bitcoin. The battle between profit-takers and buyers will ultimately determine the direction of BTC’s price movement in the near future.
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