Tracking Bitcoin’s Profit Cycles: Could A New Market High Be Near?
02 November 2024 - 2:00AM
NEWSBTC
Bitcoin price has seen many cycles over the years, marked by
distinct growth phases, peaks, and corrections. To better
understand these cycles, a CryptoQuant analyst, using the pseudonym
‘datascope,’ has highlighted the relevance of the UTXO Block
Profit/Loss (P/L) Count Ratio Model. This tool offers unique
insights into the balance of profitability and losses among Bitcoin
market participants, serving as a lens to examine potential price
reversals. By focusing on various moving averages, this model
tracks price fluctuations and shows how profitability shifts within
the market over time, offering clues about when new market peaks
might form. Related Reading: Is Bitcoin’s Bull Market Just
Beginning? Leveraged Bets Suggest Big Moves Are Coming Predicting
Market Peaks Through Profit And Loss Ratios Datascope’s analysis
highlights the significance of short, medium, and long-term trends
captured by 7-day, 30-day, and 365-day moving averages. This
multi-perspective approach is valuable for long-term investors and
short-term traders, as it distinguishes between shifts impacting
immediate market movements and those affecting longer-term cycles.
The model demonstrates that changes in the profitability ratio are
critical for gauging market sentiment and potential price
movements. As Datascope explains, a decrease in overall
profitability ratios suggests that short- and medium-term trading
strategies may now be more practical, responding to a market less
defined by extreme long-term price swings. One of the key findings
from the UTXO P/L model is the behavior of the 30-day profit and
loss ratio relative to the 365-day moving average. Datascope noted
that when the 30-day ratio rises above the 365-day average, it
could signal a new price peak. In simple terms, crossing short- and
long-term profitability lines indicates that investor sentiment is
shifting towards more profitable conditions. Price increases have
historically followed this occurrence as optimism fuels further
buying pressure. For instance, the analyst pointed out that while
economic conditions varied between 2021 and 2022, similar trends
were observed in the model during both years, particularly in how
the profit and loss ratio used the annual moving average as a
resistance line. Datascope suggests that if the profit and loss
metrics consistently stay above the annual average, Bitcoin may be
on track to establish new highs. Bitcoin Market Performance
Meanwhile, Bitcoin is seeing an increase in price following a
recent correction that led to the asset’s price falling below
$70,000 yesterday. Related Reading: Bitcoin Price To New ATH Soon?
Analyst Who Called $72,000 Surge Reveals What Needs To Happen
Bitcoin currently trades for $70,379, down by 0.9% in the past day.
Before this decrease, the asset experienced a surge, recording a
24-hour of $71,500. Featured image created with DALL-E, Chart from
TradingView
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