On-chain data shows that Bitcoin investors’ profit-taking has seen a huge decline from last month’s peak, which could be a positive sign for BTC.
Bitcoin has realized profits on exchanges of up to $277 million per day
According to data from an on-chain analytical company Glass knotBitcoin market traders’ profit taking has dropped significantly over the past few weeks.
To track profit taking, the analytical company used the “Realized Profit on Stocks” indicator. This indicator, as the name suggests, measures the total amount of profit that investors collect or “realize” through transactions on centralized exchanges.
A profit on the blockchain is said to be realized when a token is transferred with the previous transaction price lower than the current spot value. However, not all transfers on the network correspond to a transaction, so Glassnode specifically narrow the metric to transfers related to influence exchanges.
Coin holders typically transfer their coins to these platforms when they want to participate in selling activities, so the amount of profit made from exchange proceeds is more likely to be an precise picture of the profit-taking situation in the sector.
Here is a chart of an indicator provided by the analytics firm that shows the trend of the 7-day moving average (MA) of Bitcoin’s realized profit on exchanges over the last few years:
The 7-day MA value of the metric appears to have seen a decline in recent days | Source: Glassnode on X
As shown in the chart above, MA Bitcoin’s 7-day realized profit on exchanges saw a acute escalate last month as BTC exploded to novel highs. This suggests that investors made huge profits during peak periods.
Please note that the version of the indicator used here is “entity adjusted”, which means it only tracks transactions that occur between two entities. “Entity” means a group of addresses that Glassnode believes belong to the same investor.
As BTC has peaked above $99,000, its price is stuck in a consolidation phase. It is clear from the chart that the slowdown in the bull market has led to a noticeable decline in profit taking in the market.
“Daily profits achieved by exchanges have declined significantly and now amount to $277 million per day,” notes the analyst firm. “This represents a 42% decline from the November 16 peak of $481 million per day.”
This year, Bitcoin also saw two other massive profit-generating events of comparable scale, both of which led to cryptocurrency market highs. Therefore, the fact that profit-taking in this asset has calmed down recently, even though the price remains relatively high, could be a positive sign of continued growth.
BTC price
Bitcoin is currently in the middle of a recent consolidation range as its price hovers around $95,900.
Looks like the price of the coin has taken to a sideways trajectory recently | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, chart from TradingView.com
