Bitcoin: As BTC profit-taking rises, can it lead to a market correction?

Investors are realizing profits as bitcoin‘s price remains steady

November 15, 2023

bitcoin‘s profit-taking activity gains traction

A recent report has revealed that profit-taking activity in the bitcoin market is on the rise as the leading cryptocurrency’s price remains stagnant. The taker buy-sell ratio, which measures the ratio between the buy volume and sell volume in an asset’s futures market, has shown a decline, indicating increased profit realization by investors.

BTC profit-taking activity rallies

The taker buy-sell ratio metric is an important indicator of market sentiment and behavior. A value greater than 1 suggests more buy volume than sell volume, while a value less than 1 indicates more sell volume than buy volume. In a recent report by the CryptoQuant analyst Greatest Trader, it was found that the metric trended upward during BTC‘s price rally in October. However, with BTC‘s price stagnating at $36,500, the metric reversed its trend and started a downtrend.

The decline in the taker buy-sell ratio suggests that investors are increasingly inclined to take short positions and realize profits, particularly during this phase of price stability. BTC‘s taker buy-sell ratio (30d SMA) at press time was 1.007.

The steady decline in BTC‘s open interest in the futures market further confirms that traders are closing out their positions, potentially signaling a reversal in the market’s direction.

Short and long-term holders selling above their cost basis

An assessment of the spent output profit ratio (SOPR) for short and long-term BTC holders showed that both cohorts of investors have realized profits since coin distribution began. The SOPR measures the degree of profit and losses incurred by an asset’s holders over a given period of time. As of this writing, the short-term holder SOPR on a 30-day moving average was 1.01, while the long-term holder SOPR was 1.28, according to data retrieved from CryptoQuant.

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In conclusion, the recent data suggests that investors are taking advantage of BTC‘s price stability to realize their profits by closing out their positions. This profit-taking activity may have implications for the future direction of the cryptocurrency market. If you’re a BTC investor, it’s important to keep an eye on these trends and adjust your strategy accordingly.

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By Team