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Bitcoin News
Hard To Be “Too Scared Of Bitcoin Price Action,” Says Analyst. Here’s Why
Bitcoin has been having a bad time recently, but this analyst isn’t too worried about it, based on the recent trend in an on-chain indicator.
Bitcoin Unrealized Loss Has Been At Low Levels Recently
In a new post on X, on-chain analyst Checkmate talked about how the latest price action of the cryptocurrency isn’t too scary when considering the trend in the Unrealized Loss.
The “Unrealized Loss” here refers to an on-chain indicator that keeps track of the total loss that addresses across the Bitcoin network are holding right now.
This metric works by going through the transaction history of each coin in circulation to see what price it was last moved at. Assuming that this latest transaction was the last point at which the coin changed hands, the price at its time would reflect its current cost basis.
If this cost basis is higher than the current spot price of the cryptocurrency for any coin, then that particular coin can be considered to hold a net unrealized loss currently.
The Unrealized Loss subtracts the two values to calculate the magnitude of loss for every coin and then sums them up. Naturally, coins of the opposite type contribute towards the “Unrealized Profit” metric instead.
In the context of the current discussion, the Unrealized Loss itself isn’t of interest, but rather a normalized form called the Relative Unrealized Loss. This metric divides the Unrealized Loss by the asset’s market cap.
Below is a chart showing this Bitcoin indicator’s trend over the past decade or so.
As is visible in the graph, the Bitcoin Relative Unrealized Loss peaked during the November 2022 bear market lows and has since been heading down. Recently, the metric’s value has been close to zero, implying the losses in the market have only been equal to a negligible percentage of the market cap.
The reason behind these lows is the recent price surge towards the new all-time high (ATH). The entire supply becomes profitable during ATH breaks, so the Unrealized Loss shrinks to zero.
The indicator naturally also fell to zero earlier in the year when the ATH took place, but the bearish price action since then has meant that some of the investors have gone back into losses.
Interestingly, though, the indicator’s value has still been extremely low, implying that while some buying has occurred at the higher prices, it hasn’t been excessive.
From the chart, it’s visible that spikes followed bull market tops in the past in the indicator, as only a small drop was enough to put all the latecomers chasing hype into a loss. That hasn’t been the case in the current cycle so far.
“It is hard for me to be too scared of Bitcoin price action when unrealized losses look like this,” notes Checkmate. The analyst also cautions that it could deteriorate from here, but it hasn’t happened yet.
BTC Price
Bitcoin has continued its recent bearish momentum during the past day as its price has now slipped to ,500.
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Bitcoin News
Bitcoin Relative Open Interest Lowest Since Feb, Analyst Says “Hard To Be Bearish”
Data shows the Bitcoin Open Interest as a percentage of its market cap has been at lows recently, a sign the derivatives side has been healthy.
Bitcoin Open Interest Is Now Less Than 2% Of The Market Cap
As explained by analyst James Van Straten in a new post on X, the derivatives side of the market has looked “extremely healthy” while BTC’s latest recovery has occurred.
The metric of interest here is the “Open Interest,” which keeps track of the total amount of derivatives-based Bitcoin positions that are currently open on all centralized exchanges.
When the value of this indicator goes up, it means that the investors are opening up more positions on the market right now. Generally, the total leverage in the market rises when such a trend takes place, so the price of the asset could end up turning more volatile following it.
On the other hand, a decline in the metric suggests users are either closing up their positions of their own volition or getting forcibly liquidated by their platform. The cryptocurrency may behave in a more stable manner following such a decrease.
Now, here here is a chart that shows the trend in the Bitcoin Open Interest over the past few years:
In the graph, the Open Interest is displayed as a percentage of the asset’s market cap (that is, the total valuation of the entire BTC circulating supply at the current spot price).
It would appear that the indicator has registered a drawdown recently and has slipped under the 2% mark. This would suggest that the positions on the derivatives market now make up for less than 2% of the market cap.
From the chart, it’s visible that the metric had earlier spiked to a high as the coin’s rally towards a new all-time high had taken place. Interestingly, the market cap was rapidly going up in this rally, but this ratio was still trending up, implying that speculation had been growing at a rate faster than the price.
This may have been a sign that the derivatives side was starting to become overheated. In the drawdown that had followed the price top, the investors had started getting liquidated, leading to the ratio registering a decline.
The most recent price drop had helped reset the market further, bringing the ratio down to levels not seen since February. Bitcoin has been mounting a recovery effort in the past few days, but so far, the derivatives market has remained cool. “Hard to be bearish here,” says the analyst.
It now remains to be seen if the health of the market would continue to look optimistic in the coming days, thus potentially allowing for the recovery to go a step further.
BTC Price
Bitcoin had returned back above ,500 earlier, but the asset has since seen a small pullback as it’s now down to ,100.
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Bitcoin News
Searching For Hope: 70% Of PEPE Investors Hit Hard – What Now?
Meme coin PEPE navigated a turbulent week, experiencing a 14% price drop but finding solace in rising bullish sentiment and technical indicators pointing towards a potential rebound.
Investor Woes, But Whale Appetite Grows
NewsBTC’s analysis, using data from IntoTheBlock, revealed over 70% of Pepe investors currently sitting on losses, suggesting a challenging week. However, whales saw opportunity in the dip, with Santiment data showing a sharp increase in Pepe holdings by top addresses.
Bullish Buzz Despite Price Slump
Sentiment around Pepe took an interesting turn, defying the price decline. The meme coin’s Weighted Sentiment, tracked since February 1st, witnessed a rise, indicating growing optimism within the community. This positive buzz was further fueled by consistent social media engagement, reflected in high Pepe Volume throughout the week.
Exchange Activity Signals Caution
While whales accumulated, broader market selling sentiment weighed on Pepe. NewsBTC observed a drop in Exchange Outflow, suggesting investors moving their holdings off exchanges for potential selling. Additionally, a drastic increase in Supply on Exchanges coupled with a decrease in Supply outside of Exchanges painted a picture of potential selling pressure in the near future.
Technicals Hint At Reversal
Despite the recent price struggles, Pepe’s daily chart offered some positive signals. The MACD indicator hinted at a potential bullish crossover, suggesting a shift in momentum. The Relative Strength Index (RSI) neared the oversold zone, potentially triggering buying pressure if it enters that territory. The Chaikin Money Flow (CMF) also displayed an uptick, further reinforcing the possibility of a price increase.
Bears are currently attempting to push the price below a crucial support level of .0000009. If this level breaks, significant losses could occur, potentially dragging the price down to lows of .0000006 seen in September/October 2023, representing a decline of over 30% from current levels.
Community Strength Endures
Despite the market fluctuations, Pepe boasts a strong community presence, with over 154,000 individual holders and active communities on platforms like X (formerly Twitter) and Telegram, exceeding 500,000 followers and 60,000 members respectively.
The outlook for Pepe remains cautiously optimistic. While recent price drops and selling pressure raise concerns, bullish sentiment, technical indicators, and a strong community suggest potential for a reversal.
However, investors should carefully consider both positive and negative factors before making any investment decisions, acknowledging the inherent volatility associated with meme coins.
Featured image from Adobe Stock, chart from TradingView