Bitrabo Editorial
According to on-chain data, profit-taking transactions in the Ethereum market have increased recently, signaling a potential bearish trend for the asset.
Surge In Ethereum Profit-Taking Volume Indicates Potential Bearish Trend
The analytics firm Santiment reported that a substantial amount of profit-taking is currently ongoing in the Ethereum market. The relevant indicator used is the “ratio of on-chain transaction volume in profit to loss,” which compares the profit-taking transfers with the loss-taking ones.
The metric looks at the on-chain history of each coin to determine its last selling price. If the coin’s current selling price is higher than the last selling price, it is counted inside the profit-taking volume. Conversely, if the last selling price is higher, the coin is counted in the loss-taking volume.
As shown in the chart, the profit-to-loss transaction volume ratio for Ethereum has increased substantially over the past few days, indicating a higher number of profit-taking transactions than loss-taking ones:
The value of the metric seems to have been quite high in recent days | Source: Santiment on Twitter
A positive ratio indicates that profit-taking transactions are more dominant than loss-taking ones, and currently, the metric shows a high level of positive values.
On a spike in the ratio yesterday, the metric reached a peak value of 1.3, indicating that profit-taking transfers were happening 2.3 times more than loss-taking ones. The highest value for this metric was seen in January this year, during the asset’s first rally, when profit-taking had peaked, and the upward trend had slowed down.
Since the recent spike in profit-taking yesterday, the price of Ethereum has fallen below $1,900, indicating the potential bearish impact of profit-taking.
Santiment suggests that the ratio needs to cool down if Ethereum’s price has to make a significant movement towards the $2,000 level.
ETH Price
As of writing, Ethereum is trading at around $1,800, down by 2% over the last week.
ETH hasn't moved much in the last few days | Source: ETHUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Santiment.net