On-chain data suggests that bitcoin has gone through one of its longest profit-taking events in five years over the past few months.
bitcoin has seen profit taking for about 90 days straight
in a new mail Over at X, analyst James Van Straten has talked about the wave of profit-taking currently occurring in the bitcoin market. The relevant indicator here is Glassnode's “Net Realized Profit/Loss,” which tracks the net amount of profit or loss made by users on the btc network.
The metric works by reviewing the transaction history of each coin that is transferred on the blockchain to see what price it moved at before this latest move.
Assuming that both transfers of the currency involved a new change of hands (i.e. buying and selling occurred), this movement would have generated a profit or loss equal to the difference between the two prices.
Naturally, a higher previous spot price would mean that the sale of the coin suffered some losses, while a lower price would suggest that its owner made some profits.
Now, here's a chart showing the trend in bitcoin's net realized gains/losses over the past few years:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/01/Bitcoin-is-experiencing-a-profit-craze-when-will-it-end.png" alt="bitcoin net realized profit/loss” width=”1800″ height=”1013″/>
The value of the metric seems to have been green in recent weeks | Source: @jvs_btc on X
When the net realized profit/loss has a positive value, it means that bitcoin investors are making profits right now. On the other hand, being underwater means that loss realization is the dominant form of selling today.
From the chart, you can see that profit taking has been what btc users as a whole have been leaning towards recently, as the indicator has had some notable green values.
In fact, the latest positive net realized profit/loss values have lasted for about 90 days, suggesting that investors have been netting profits for a while now.
This profit-taking streak is one of the longest that the cryptocurrency has witnessed over the last five years. The longest streak in this period came during the 2021 bull run, where profit-taking was dominant for 155 consecutive days.
A few times during the last run, the indicator was close to entering negative territory, but each time it recovered towards the green zone.
Naturally, this is due to the fact that the price of bitcoin has generally increased in recent months, so investors would have been continually making profits.
However, recently, btc has had some difficulties as its price has seen a notable drop. This is likely to cause exhaustion among profit sellers, which could ultimately lead to the end of the streak.
bitcoin price
At the time of writing, bitcoin is floating around the $41,000 level, down more than 3% in the last week.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/nvjm11dI/" alt="bitcoin price chart” width=”1534″ height=”868″/>
Looks like the price of the asset has had a hard time in the last few days | Source: BTCUSD on TradingView
Featured image by Yiğit Ali Atasoy on Unsplash.com, TradingView.com charts, Glassnode.com