According to a recent on-chain data evaluation, the Bitcoin price might not be seeing a start to renewed price expansion in the near-term. Interestingly, this hypothesis seems to align with the multiple recovery attempts by the flagship cryptocurrency over the past few weeks.
BTC Net Realized Profit Peak At $17M/hr Before Swift Price Downturn
In a March 20 post on the social media platform X, on-chain research firm Glassnode revealed what was behind Bitcoin’s recent reversal from what initially looked like an expansion move. This is based on the Net Realized Profit/Loss (NRPL) (24h Moving Average) metric, which reflects whether the market is predominantly realizing profits or losses, by tracking (and comparing) the amount of either that has been realized by holders over 24 hours.
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Glassnode highlighted that readings on the NRPL metric recently reached a high of approximately $17 million/hr before the price of Bitcoin started moving downwards again. This trend was outlined as one of the drivers behind the flagship cryptocurrency’s loss of its $70,000 footing.
According to the analytics firm, the heightened profit-taking activity among Bitcoin’s investors has continued to absorb bullish momentum, thereby converting it to bearish pressure. Notably, this pattern has repeated itself at multiple moments in the current cycle, specifically as Bitcoin attempts to rally to the upside.
Glassnode further explained that the degree of uncertainty currently in the geopolitical world has caused “demand depth” to compress. As a result, realization events like the last one have become too much for the market to absorb, explaining the recent slip below $70,000.
Interestingly, this is not a standalone reason behind BTC’s activity. After Bitcoin fell below the $85,000 support, a surge in on-chain activity was observed due to liquidity repositioning by investors.
However, the waning market liquidity in recent weeks suggests that BTC price recovery is buoyed by seller exhaustion rather than by strong and consistent demand. Hence, the life of the recovery is truncated whenever sellers enter the market
Short-Term Holders Realize Losses As Price Nears $74K
For instance, crypto analyst Darkfost highlighted that Bitcoin’s short-term investors are locking in more losses in recent weeks. This is reflected in readings from the Short-Term Holder P&L to Exchanges Sum metric.
In their post on X, Darkfost revealed that more than 28,000 BTC have recently been sent to exchanges, with these investors seemingly cutting their losses. These losses, pointed out the analyst, continued to grow as the Bitcoin price went into a steady decline.
For this reason, it is safe to expect more bearish pressure from this investor cohort, as additional panic-driven sales would likely contribute more bearish momentum to the Bitcoin market. Thus, rather than a hopeful story of positive expectations, the Bitcoin price seems to be giving warning signs to investors.
As of this writing, Bitcoin holds a valuation of about $70,532, reflecting no significant movement in the past day.
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Featured image from iStock, chart from TradingView