Emily Walker
Recent on-chain data indicates that Bitcoin investors are taking fewer profits following last month’s peak, which may signal positive trends for BTC.
Bitcoin Realized Profit to Exchanges Falls to $277 Million Daily
According to the on-chain analytics company Glassnode, there has been a noticeable decline in profit-taking among Bitcoin traders over the past weeks.
The firm utilizes the “Realized Profit to Exchanges” metric to gauge profit-taking activities. This metric specifically tracks the total profit that investors ‘realize’ through transfers to centralized exchanges.
A profit is considered realized in the blockchain when a token is transferred at a price higher than its previous transaction value. However, not every transfer on the network leads to a trade, which is why Glassnode focuses solely on exchange inflows for this metric.
Typically, holders send their coins to exchanges when intending to sell, making this inflow data a more reliable indicator of prevailing profit-taking trends.
Below is a chart displaying the 7-day moving average of Bitcoin’s Realized Profit to Exchanges over the past few years:
The chart shows that the 7-day moving average of Bitcoin Realized Profit to Exchanges spiked last month, coinciding with Bitcoin reaching new highs. This indicates that investors were cashing in on profits during the rally.
It’s important to note that the version of the indicator used here is “Entity-Adjusted,” focusing only on transactions between distinct entities. An ‘entity’ refers to a group of addresses identified by Glassnode as belonging to a single investor.
After BTC peaked above $99,000, it has entered a consolidation phase. The observed decrease in profit-taking correlates with this slowdown in the bullish trend.
According to the analytics firm, “Daily realized profits to exchanges have cooled off significantly, now at $277M/day,” reflecting a 42% decrease from November 16’s peak of $481M/day.
This year, Bitcoin experienced two additional substantial profit-taking episodes, each marking peaks in the cryptocurrency market. Consequently, the recent calming of profit realization, despite the price remaining high, may indicate potential positive momentum for the ongoing rally.
BTC Price
Bitcoin is currently consolidating, with its price hovering around $95,900.