Ethereum Bearish Signal: Profit-Taking Hits Highest Level Since Feb 2021
04 February 2023 - 12:16AM
NEWSBTC
On-chain data shows Ethereum profit-taking has spiked to high
levels not seen since February 2021, a sign that could be bearish
for the asset’s price. Ethereum Profit Taking Rises As ETH
Continues To Rally As per data from the on-chain analytics firm
Santiment, this profit-taking may suggest that the holders don’t
believe the rally would last too long. The relevant indicator here
is the “ratio of daily on-chain transaction volume in profit to
loss,” which, as its name already implies, measures the ratio
between the profit-taking and loss-taking volumes in the Ethereum
market. The metric separates these two volumes by going through the
on-chain history of each coin being moved to see what price it was
previously sold at. If this last price for any coin was less than
the current ETH value, then that particular coin is being sold at a
profit now, and so the indicator would count its sale in the
profit-taking volume. Similarly, if the previous price was greater
than the latest one, then the coin is currently being moved at a
loss, and the transfer contributes to the loss-taking volume. Since
the indicator takes the ratio between these two volumes, it can
tell us whether there is more profit-taking or loss-taking going on
in the Ethereum network currently. Related Reading: Are Nigerians
Really Buying Bitcoin For As High As $34,000? Now, here is a chart
that shows the trend in this ratio for Ethereum over the past year:
The value of the metric seems to have been pretty high in recent
days | Source: Santiment on Twitter As displayed in the above
graph, the Ethereum ratio between the transaction volume in profit
and that in loss observed a sharp spike above the ‘1’ mark earlier
during this rally. This means that a greater amount of
profit-taking was happening as compared to the loss-taking back
then. Soon after this surge, the rally saw a slowdown, suggesting
that this selling for profits may have been behind it. In the last
couple of days, the cryptocurrency has again made an attempt to
continue the upwards momentum, in which the price briefly broke
above $1,700 for the first time in five months. Related Reading:
Bitcoin and Ethereum Whale Activities Plummet – Are Whales Getting
Bored? With this latest price rise, the ratio’s value seems to have
shot up as well, suggesting that investors see this surge as an
opportunity to collect their profits. The current level of
profit-taking has been even higher than what was observed last
month. In fact, the values right now are the highest since February
2021, about two years ago. Santiment notes that this trend could
suggest traders don’t believe this climb will continue for too
long. In the past day, the Ethereum price has already come back to
lower levels, implying that the selling may already be showing an
effect on the price. ETH Price At the time of writing, Ethereum is
trading around $1,600, up 4% in the last week. Looks like the value
of ETH has seen some rise during the past day | Source: ETHUSD on
TradingView Featured image from Becca on Unsplash.com, charts from
TradingView.com, Santiment.net
Ethereum (COIN:ETHUSD)
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Ethereum (COIN:ETHUSD)
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