In the rapidly evolving world of cryptocurrencies, new developments and data are constantly emerging. Recently, Glassnode, an on-chain market analysis provider, released data showing that Bitcoin’s current profit-taking chain is the longest since the bull market at the end of 2021, and the trend is remarkable. Investors will wait and see.
Bitcoin Investors Lock in Profits in Longest Profit-Taking Since 2021 Bull Run @azcoinnews https://t.co/tRvzOJ2Y52
— Kyptos (@azcoinnews) February 22, 2023
The metric that Glassnode uses to measure the net profit or loss of all coins moved is called Net Profit/Loss. It is calculated by subtracting actual profit from actual loss. Investors have been taking profits for about a month, the longest time series since the end of the 2021 bull market, according to Glassnode data. That suggests some investors are opting to take advantage of current market conditions to take profits.
Actual Net Profit/Loss | Source: glass node
Last week, profit-taking was largely driven by short-term holders. Only about $45 million in profitable tokens have been traded in the past 14 days, a much smaller number than previous batches. That suggests the market is stabilizing, with many investors becoming more cautious.
One of the reasons for this caution may be that Bitcoin faces resistance at $25,000. Investors are taking profits on the opportunity, creating resistance at this important level, according to Glassnode data. Additionally, CryptoQuant reported a dead cross, where the short-term UTXO dominance line (1 month ~ 3 month) fell below the long-term UTXO dominance line (2 year ~ 3 year). This is rare, and only twice has it happened at the end of a bear market.
Dead cross on short-term UTXO dominance chart | Source: CryptoQuant
Despite these developments, some analysts believe the current economic situation may present a buying opportunity. With the global economy in recession for the first time since Bitcoin’s inception, a crash similar to the one in March 2020 could offer an opportunity to “buy the dip.” However, it is important to remember that cryptocurrencies are volatile and investment decisions should always be based on the research and prudent guidance of a financial professional.
Taken together, Bitcoin’s profit-taking chain is an important development that investors should take note of. Although caution is warranted due to resistance at $25,000 and the recent dead cross, the current economic situation may present opportunities for investors willing to take more risk. As always, don’t forget to do thorough research and seek professional advice before making any investment decisions.
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