When we study most #BTC metrics that represent profit or loss-taking… — Nodecharts — TG.ME

When we study most #BTC metrics that represent profit or loss-taking, we almost always get similar results. These metrics are incredibly useful in detecting whether we are at a market bottom (accumulation) or, conversely, at a market top (distribution). In today’s dashboard, we display the price of #Bitcoin at the top, the coin days destroyed in profit (green) and loss (red) in the middle section, and the realized profit/loss ratio at the bottom. If we aim to identify areas where a bear market could end, we look for losses. By applying moving averages with specific lenghts, we can detect with great precision the ideal entry points into the market, seeking areas of significant losses and minimal gains. As we’ve mentioned on several occasions, zones with substantial losses always represent liquidity for large capital investors who want to enter the market without pushing the price against themselves. As seen in the image, the market entry zones are clearly marked on the dashboard we’ve created, labeled as buy areas. On the other hand, if we aim to detect areas where a bull market could end, we look for profits. This is not as straightforward as identifying bear market bottoms, as behaviors vary depending on the metrics we analyze. It is well known that the most challenging part of investing is knowing when to exit the market. However, one pattern we’ve observed in the last two bull cycles is related to the coin days destroyed in profit metric. While the price climbed higher, this metric showed lower highs, forming a divergence. This suggests that even though higher prices were reached, either the volume transferred was much lower or the holding time of the bitcoins being sold was shorter, indicating that long-term holders (LTH) had already taken profits. As for the realized profit/loss ratio, we see two possible behaviors with a similar meaning to what was described above. In 2017, the price kept rising while the metric failed to reach new highs, confirming what we saw with coin days destroyed in profit. If the price increases, the profit ratio should rise as well, as profitability should align with price growth. Since this wasn’t the case, it signaled a weakening trend, with profits being taken earlier or with a decreasing volume of gains. In 2021, this pattern was even clearer, with a strong divergence between rising prices and lower highs in the metric. Even during the later price surge towards the end of 2021, the ratio was much lower, indicating that the November ATH was clearly manipulated, driven by short-term holders. We will be closely monitoring these metrics in the coming months, as they could be key in signaling when we will reach the end of the current cycle. We may see a pattern similar to 2017, with a gradual slowdown, or 2021, with a more pronounced divergence. However, it is also possible that we are witnessing an entirely new behavior, given the current market context and the participation of institutional investors. Finally, if you’d like access to these dashboards, purchase one of our data plans, and we’ll provide them to you. This way, you’ll always stay informed about which phase of the market we’re in. #crypto #cryptotrading #onchain