- In recent weeks, the increase in BTC accumulation has brought traders’ returns to their highest level since May 2022.
- According to Santiment data, BTC’s MVRV ratio (Z-Score) was positive 0.776 at the time of writing, indicating that the leading cryptocurrency is overvalued.
- According to the price chart, BTC’s price is resting near the upper band of the Bollinger Bands indicator.
Profit in Bitcoin reaches the highest level in 14 months; Is a price correction possible in BTC soon?
Price Rally Boosts Profit in Bitcoin
The price of Bitcoin has not fallen below $30,000 since the beginning of July. Today, the BTC price rose to $31,250. On July 3rd, the price had risen to $31,380. This price rally brought the realized profit of the leading cryptocurrency to its highest level in 14 months;
The evaluation of BTC’s performance on-chain revealed that despite facing the $30,000 resistance level in recent weeks, the amount of deposits on crypto exchanges continued to decrease. This indicated that investors were not interested in selling their BTC assets. Instead, many people turned to accumulating more BTC.
Increase in Profitability Could Reverse the Price
In recent weeks, the increase in BTC accumulation has brought traders’ returns to their highest level since May 2022. The continuous increase in traders’ profits could cause the price to reverse. According to Santiment data, BTC’s MVRV ratio (Z-Score) was positive 0.776 at the time of writing, indicating that the leading cryptocurrency is overvalued.
Typically, when an asset’s MVRV ratio (Z-Score value) is overvalued, market participants have pushed the price of such an asset beyond what is justified by its average realized value in the past. This situation can be attributed to short-term speculative buying, investor enthusiasm, or other factors driving the price up. In such cases, a price correction or consolidation period usually follows.
Additionally, when looking at the profit/loss ratio of BTC’s on-chain transaction volume, it was observed that profitable BTC transactions have been occurring twice as fast as losing transactions for the past few weeks. Therefore, if the profit-taking activity continues at this pace, a price decline may be seen.
According to the price chart, BTC’s price is resting near the upper band of the Bollinger Bands indicator. This indicates that the cryptocurrency’s price is approaching the upper limit of its recent price range and is considered a sign of a potential price pullback.
The Relative Strength Index (RSI), Money Flow Index (MFI), and Chaikin Money Flow (CMF), which are strong momentum indicators, were above their respective centerlines (indicating ongoing cryptocurrency accumulation). However, BTC’s Aroon Up Line was showing a 21.43% downward trend. When an asset’s Aroon Up line approaches zero, the uptrend is considered weak.
