BTC Profit Soars: Time to Take Profits Before a Correction?
• Bitcoin’s [BTC] realized profit has reached a 14-month high.
• A continued jump in trader returns may lead to a price correction.
• The surge in BTC accumulation has pushed the average trader’s returns to its highest level since May 2022.
Bitcoin Realized Profits Skyrocketing: What Does It Mean?
Bitcoin’s [BTC] realized profits are at a 14-month high, raising concerns that a price correction might follow if this trend continues.
Why Are Realized Profits Increasing?
On-chain analysis of BTC’s performance revealed that although the coin struggled with the $30,000 resistance level in recent weeks, deposits on cryptocurrency exchanges have been declining. This indicates a lack of interest among investors in selling off their holdings and instead many are accumulating more coins.
The surge in BTC accumulation has pushed the average trader’s returns to its highest level since May 2022.
What Is MVRV Ratio (Z Score)?
MVRV ratio (Z Score) is an on-chain assessment used to evaluate whether an asset is overvalued or undervalued. When an asset’s MVRV ratio (Z-Score value) is overvalued, it means that market participants have bid up the price of such an asset beyond what is justified by its historical average realized value.
Are We Seeing Profit Taking?
Data from Santiment shows that the ratio of BTC’s on-chain transaction volume in profit to loss spike has been twice as fast for several weeks now, indicating profit taking activity. If this continues at this rate, it could lead to a price cool down.
The surge in Bitcoin’s [BTC] realized profits has led some analysts to suggest that we could see a period of consolidation or a possible correction if these trends continue. To make sure you don’t get caught out when prices do adjust, it’s best to keep an eye on your own investments and make sure you’re not overleveraged going into any potential corrections .