According to a recent on-chain data assessment, Bitcoin price may not see the onset of renewed price increases in the near term. Interestingly, this hypothesis seems to be in line with the flagship cryptocurrency’s multiple recovery attempts in recent weeks.
BTC net realized profit peak of $17 million/hour before rapid price decline
In a March 20 post on 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) (24-hour moving average), which reflects whether the market is mainly realizing profit or loss, by tracking (and comparing) the amount of both realized by holders over 24 hours.
Related reading
Glassnode highlighted that readings of the NRPL metric recently peaked at around $17 million/hour before Bitcoin’s price started moving downward again. This trend was outlined as one of the driving forces behind the flagship cryptocurrency’s $70,000 loss.
According to the analytics firm, increased profit-taking activity among Bitcoin investors has continued to absorb the bullish momentum, turning it into bearish pressure. Notably, this pattern has repeated itself at several points in the current cycle, especially as Bitcoin tries to recover to the upside.
Glassnode further explained that the level of uncertainty currently in the geopolitical world has caused “demand depth” to compress. As a result, realization events like the previous one have become too much for the market to absorb, explaining the recent drop 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 investors’ liquidity repositioning.
However, declining market liquidity in recent weeks suggests that BTC’s price recovery is supported seller exhaustion rather than by strong and consistent demand. Therefore, the recovery lifespan is shortened once sellers enter the market
Short-term holders realize losses as the price approaches $74,000
Crypto analyst Darkfost, for example marked that Bitcoin’s short-term investors have suffered more losses in recent weeks. This is reflected in the values of the Short-Term Holder P&L to Exchanges Sum metric.
In their post on These losses, the analyst pointed out, continued to grow as the Bitcoin price steadily declined.
For this reason, it is safe to expect more bearish pressure from this investor cohort, as additional panic-driven selling would likely contribute bearish momentum to the Bitcoin market. So instead of a hopeful story of positive expectations, Bitcoin price seems to be giving warning signals to investors.
At the time of writing, Bitcoin has a valuation of around $70,532, which does not reflect any significant movement in the past day.
Related reading
Featured image from iStock, chart from TradingView