On-chain data shows that Bitcoin profits held by the Trader group have recently increased. Here’s if it’s as high as the last peak.
Bitcoin investor rate of 1-3 months is currently 47%
As CryptoQuant’s head of research, Julio Moreno, explains in a new article mail On X, traders’ unrealized profits have reached high levels recently. The on-chain metric of interest here is the “profit/loss margin,” which tells us the net profit or loss held by Bitcoin investors.
This indicator works by reviewing the transaction history of all coins in circulation to find the price at which they were last transferred. If the previous conversion price of any token was lower than the current spot value, it can be assumed that that particular token carries unrealized profit.
Likewise, coins of the opposite type are considered to carry some net loss. This profit/loss margin aggregates the profits and losses of the entire network, representing the net position.
In the context of the current topic, the profit/loss margin of only a segment of BTC investors is of interest: traders. These investors bought their coins at least one month and three months in advance.
Now, here is the chart shared by Moreno that shows the trend in Bitcoin profit/loss margin for Bitcoin traders over the past year:
Looks like the value of the metric has shot up in recent days | Source: @jjcmoreno on X
As shown in the chart above, traders’ Bitcoin P/S margin has recently risen into positive territory, meaning that these investors are now holding a significant amount of gains.
More specifically, this group has achieved a net gain of 47% since the last price rise. Historically, the higher investors’ profits, the more likely a cryptocurrency’s price will peak.
The reason behind this is that stockholders are increasingly inclined to take profits as the size of their gains increases. Traders are particularly likely to engage in selling, as this group includes relatively inexperienced hands who tend to panic easily.
The chart shows that the peak in March occurred when this indicator was around 69%. So far, the scale has not yet risen to that level.
However, BTC also reached its highest level in December last year when traders’ profit/loss margin reached 48%, which was only 1% higher than the last value.
It remains to be seen whether Bitcoin’s rise will continue despite the risks of traders taking profits or whether a slowdown will occur first.
Bitcoin price
At the time of writing, Bitcoin is trading at around $88,800, up more than 16% over the past week.
The price of the coin seems to have been climbing up over the last few days | Source: BTCUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart from TradingView.com