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Breaking News: Binance Founder Suggests President Trump Could Be Satoshi Nakamoto In Latest Statement

Is Bitcoin Ready For A Rebound? This Metric Says More Pain Needed First

Keshav Verma
Keshav Verma
2 days ago
2 mins read
Bitcoin

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On-chain data shows the loss margin of Bitcoin traders is only halfway through the way to the boundary that signaled rebounds in the last two years.

Bitcoin Traders Are About 5% Underwater At The Moment

In a new post on X, analyst Ali Martinez has talked about how Bitcoin tends to rebound when the Profit/Loss Margin of the Bitcoin traders falls under -12%. The Profit/Loss Margin refers to an indicator that measures the net amount of profit or loss that the BTC investors are carrying right now.

The metric works by going through the transaction history of each coin on the blockchain to see what price it was last moved at. If this previous price for any token was less than the current spot price, then it’s considered to be carrying a profit equal to the difference between the two prices. Similarly, tokens of the opposite type fall into the loss category.

The Profit/Loss Margin calculates the net unrealized profit or loss (as a percentage) that investors as a whole are carrying. In the context of the current topic, the version of the metric that’s of interest specifically tracks this margin for the “traders,” investors who have been holding their coins since between 1 and 3 months ago.

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Now, here is the chart shared by Martinez that shows the trend in the Bitcoin Profit/Loss Margin of the traders, as well as its 30-day simple moving average (SMA), over the last couple of years:

Bitcoin Profit/Loss Margin
The value of the metric appears to have plummeted in recent days | Source: @ali_charts on X

As is visible in the above graph, the Profit/Loss Margin of the Bitcoin traders has witnessed a plunge into the negative territory recently as BTC’s price has gone through its bearish action. Currently, the 1 to 3 months old BTC buyers are sitting about 5% underwater.

The analyst has pointed out that BTC has tended to find rebounds when these holders have been under a notable amount of pressure during the last two years. The cutoff for this distress threshold, however, lies at -12%, a level that the trader Profit/Loss Margin is still to breach under.

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It now remains to be seen whether Bitcoin will be able to find a bottom in the near future, or if one will only happen after traders experience a similar degree of pain as the previous lows.

In another X post, Martinez has highlighted that $119,750 could be a crucial mark for Bitcoin to reclaim, as it represents a key resistance level in the MVRV Extreme Deviation Pricing Bands, a pricing model for BTC based on standard deviations of the popular MVRV Ratio.

Bitcoin MVRV Extreme Deviation Pricing Bands
The price has plunged below the +0.5 SD level | Source: @ali_charts on X

“Failing to reclaim it could trigger a move down to $97,130 or even $74,500,” noted the analyst.

BTC Price

Bitcoin’s latest recovery was quite short-lived as its value is already back to $108,000.

Bitcoin Price Chart
The trend in the price of the coin over the last five days | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, CryptoQuant.com, chart from TradingView.com
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Keshav Verma
Keshav Verma

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Read more

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

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Ad discliamer

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