The Unrealized Profit Ratio metric above, calculates the unrealized profit of Deposit addresses belonging to users of OKX and Binance Exchanges. In simple terms, this ratio reflects the profit or loss of the Bitcoins in these addresses, divided by the last value at which the assets were moved.
Focusing on this metric in the short term reveals that the unrealized profit of users on these two exchanges has reached new highs compared to 2021 over the past two months.
This has significantly increased the selling pressure in the Bitcoin market. Essentially, these users, having substantial portions of their assets in profit, have exhibited more bearish sentiments than in the past, impacting Bitcoin's price behavior over the last month.
How can we use this metric as an effective tool for market analysis?
Historically, when we see a price surge and a sharp peak in this metric, it often coincides with temporary selling pressure. If the price stabilizes and these key players maintain their breakeven levels(level 0), the price typically has a higher potential to retain upward momentum and continue the bull run.
Conversely, increased selling pressure in the Bitcoin market and prices reaching the loss phase for these users (considering the unrealized profit or loss ratio below 0) usually lead to a decrease in demand from these individuals. This situation creates a capitulation phase for investors, often resulting in significant price corrections.
What is the current market situation?
Currently, after a sharp decline in Bitcoin's price and a corresponding significant reduction in these users' profit margins, the metric remains above zero, indicating that the collective user base of these exchanges is in profit.
As long as this metric stays above zero, the demand and price growth outweigh the likelihood of significant market drops. However, continuous monitoring of this metric is recommended for understanding market fluctuations and analyzing the bitcoin price trends.
Written by Crazzyblockk
