Has the rise of Bitcoin (BTC) to $30,000 since March 2023 signaled the end of the bear? Based on realized profit and loss data, the market is at the tipping point, with a high probability of an uptrend within the next few months. We take stock of the situation.
https://cryptoast.fr/feed/
Bitcoin (BTC) : les profits et pertes réalisés révèlent-ils la fin du bear market ?
A bull market in the starting blocks
After a very difficult year 2022 for the cryptocurrency sector, is the bull market starting to show up? According to data on profits and losses made by Bitcoin (BTC) investors, we are at a tipping point which could lead to higher prices in the long term.
First of all, remember that realized profits and losses serve as an indicator to understand the state of the market. Their data derives directly from the sales and purchases made by investors. They therefore oppose unrealized profit and loss, another indicator that only takes into account unclosed positions.
Taking a closer look at the purchases and sales made annually on Bitcoin between 2011 and 2023, two key periods are to be remembered to anticipate market trends:
When the annual sum of realized profits (in green on the graph) is greater than the losses, then Bitcoin is in its uptrend ; From the moment the annual sum of realized losses (in red on the graph) is greater than the gain, the price of Bitcoin is approaching the lowest point it could reach.
Figure 1 – Annually realized profits and losses on Bitcoin (BTC) cryptocurrency
To take advantage of the best opportunities offered by the market, the key moment not to be missed is the short period during which the annual realized losses exceed the annual realized profits. According to the previous cycles, this period extends from 6 to 12 months approximately.
According to data for our current cycle, losses realized annually have been dominant since September 2022. If the gradual reduction in losses, which began in December 2022, continues over the coming months, a trend reversal is to be expected in favor of bullish investors.
Finally, note the strong correlation between the ratio of annualized profits and losses (line in blue) and periods dominated by losses realized annually. When this ratio falls below the 125% mark, realized losses take precedence over profits.marking the most favorable time to start taking a position in the market.
Today, this ratio is stagnating around 50%. With the exceeding of its lowest point, having taken place on April 04, 2023 with a ratio of 45%, the market is slowly starting to recover.
👉 Find the daily analyzes of our experts on Cryptoast Research
Our service dedicated to cryptocurrency investors. Get real-time analytics and optimize your crypto portfolio.
A bull market already in the works?
Although the profits and losses achieved annually reveal that the market is on the right track to complete its recovery, certain indicators confirm that the bear market is a thing of the past. Starting with the price of Bitcoin which has been bouncing between $26,000 and $31,000 since March 2023. The last time these prices were observed was in June 2022.
In addition, the quarterly profit and loss ratio in the Bitcoin market shows that profits have recovered from losses since February 1, 2023.
Indeed, this ratio began to rise when Bitcoin exceeded $20,000 in January 2023. As of this writing, it stands at 2.75 : this means that for every realized loss, there are 2.75 realized profits.
Figure 2 – Quarterly realized profit and loss ratio
Why such a difference between this graph and the one analyzed previously? The main reason lies in the temporality of the data analyzed. While the first graph details the profits and losses made on an annual basis, the second graph gathers information collected only over a quarter.
Since their time frame is shorter, the data in the second chart is more faithful to the current state of the market. Therefore, if trends from previous cycles are repeated in the current cycle, the bear market can be considered a distant memory.
Note that this technical analysis requires the intervention of a rigorous fundamental analysis to confirm these hypotheses.. In addition, let’s not forget that the actions of the Securities and Exchange Commission (SEC) and the future regulation of cryptocurrencies in the United States are able to strongly influence the price of cryptocurrencies by their decisions. Not to mention the risks of black swan, which can occur at any time.
👉 A look back at the most significant events of 2022 for the cryptocurrency ecosystem
Our service dedicated to cryptocurrency investors. Get real-time analytics and optimize your crypto portfolio.
Source: Glassnode
Newsletter 🍞
Receive a summary of crypto news every Monday by email 👌
What you need to know about affiliate links. This page presents assets, products or services relating to investments. Some links in this article are affiliated. This means that if you buy a product or register on a site from this article, our partner pays us a commission. This allows us to continue to offer you original and useful content. There is no impact on you and you can even get a bonus by using our links.
Investments in cryptocurrencies are risky. Cryptoast is not responsible for the quality of the products or services presented on this page and could not be held responsible, directly or indirectly, for any damage or loss caused following the use of a good or service highlighted in this article. Investments related to crypto-assets are risky in nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.
AMF recommendations. There is no guaranteed high return, a product with high return potential involves high risk. This risk-taking must be in line with your project, your investment horizon and your ability to lose part of this savings. Do not invest if you are not ready to lose all or part of your capital.
To go further, read our Financial Situation, Media Transparency and Legal Notices pages.
Always enthusiastic about new technologies, I gradually moved closer to Web3-related activities during the year 2021. Over time, I wanted to add my stone to the building. It was then that I became an editor, with the aim of explaining cryptocurrency-related topics to as many people as possible.
Timothy Bourbotte
96 items
