Recent on-chain data analysis suggests that the Bitcoin price may not be on the verge of a renewed price surge in the near future. This hypothesis coincides with the numerous recovery attempts made by the leading cryptocurrency in recent weeks.
BTC Net Realized Profit Peak At $17M/hr Before Swift Price Downturn
Glassnode, an on-chain research firm, disclosed on March 20 on the social media platform X, the reason behind Bitcoin’s recent reversal from what initially seemed like an upward move. This was based on the Net Realized Profit/Loss (NRPL) metric, which indicates whether the market is predominantly realizing profits or losses by tracking and comparing the amount of each that holders have realized over 24 hours.
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Glassnode noted that the NRPL metric reached a peak of around $17 million per hour before the Bitcoin price started declining again. This trend was identified as one of the factors behind the cryptocurrency’s loss of the $70,000 support level.
According to Glassnode, increased profit-taking by Bitcoin investors has been absorbing bullish momentum, converting it into bearish pressure. This pattern has repeated itself at various points in the current cycle, particularly during Bitcoin’s attempts to rally upwards.
Glassnode further explained that geopolitical uncertainties have led to a compression in “demand depth,” making realization events like the recent one too overwhelming for the market to handle, resulting in the drop below $70,000.
Additionally, after Bitcoin fell below the $85,000 support level, there was an increase in on-chain activity due to investors repositioning their liquidity.
However, the decrease in market liquidity in recent weeks indicates that the BTC price recovery is driven more by seller exhaustion than strong and consistent demand. Hence, the duration of the recovery is shortened whenever sellers enter the market.
Short-Term Holders Realize Losses As Price Nears $74K
Notably, crypto analyst Darkfost pointed out that short-term investors in Bitcoin have been incurring more losses in recent weeks, as indicated by the Short-Term Holder P&L to Exchanges Sum metric.
According to Darkfost, over 28,000 BTC have been sent to exchanges recently, with these investors seeming to cut their losses as the Bitcoin price continues its decline.
This suggests that there may be further bearish pressure from this group of investors, as additional panic-driven sales could add more downward momentum to the Bitcoin market, signaling caution to investors rather than positive expectations.
As of the latest data, Bitcoin is valued at approximately $70,532, showing minimal movement in the past day.
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Featured image from iStock, chart from TradingView