2023-8-31 16:40 |
On-chain data shows both the short-term and long-term Bitcoin Cash holders have entered into profits following the 13% rally.
Bitcoin Cash Traders Return To Profits As Whales Ramp Up ActivityAccording to data from the on-chain analytics firm Santiment, Bitcoin Cash traders who bought within the past 30 days, as well as those who did so in the last 365 days, are in profits after the latest surge in the cryptocurrency.
The relevant indicator here is the “Market Value to Realized Value (MVRV) ratio,” which measures the ratio between the Bitcoin market cap and the realized cap. The realized cap refers to a capitalization model for BTC that considers the acquisition or buying price of any coin in the circulating supply as its true value, rather than the spot price.
This model basically tells us about the total amount of capital that investors have used to buy their coins. Thus, through the MVRV ratio, it’s possible to know whether investors as a whole are in profit or loss right now.
When the indicator’s value is less than 1, it means that the market cap is less than the realized cap, and hence, the market as a whole is sitting on some amount of loss currently. On the other hand, the ratio being greater than the mark suggests the presence of unrealized profits.
In the context of the current discussion, the MVRV ratio itself isn’t of interest, but rather two modified forms of it are. Namely, the 365-day and 30-day timebound versions.
These metrics track the MVRV ratio’s value specifically for the investors who bought within the past year and past month, respectively. Now, below is a chart that shows the trend in these indicators for Bitcoin Cash over the past few months:
Here, the MVRV ratio’s value is shown as a percentage, with the 0% mark corresponding to the break-even 1 level. From the graph, it’s visible that the Bitcoin Cash MVRV ratio had been negative for both of these groups just recently, suggesting that the traders across the market had been carrying losses.
With the news of Grayscale’s win in its lawsuit against the US SEC, Bitcoin Cash and the cryptocurrency sector as a whole has observed a sharp rally. BCH, however, has managed to outperform most of the top assets with its 15% gains.
Thanks to these returns, both the BCH traders who bought during the past month, as well as those who got in during the last year, have got back into profits on average. This is the first time in ten weeks that this has happened.
Generally, the more the traders get into profits, the more likely they become to sell and cause impedance to the rally. Currently, the Bitcoin Cash investors are only slightly in gains, so the risk of profit-taking causing a top may not be too high, and so, the rally can potentially go on for a while yet.
Santiment notes, however, that the key to a further increase in the cryptocurrency could be the whales. In the chart, the analytics firm has attached the data for the daily number of transactions that these humongous holders are making. From this metric, it’s apparent that these investors have become active recently.
This resurgence in their activity is still not very significant, though, so it remains to be seen whether the whales will continue to become more active in the near future and drive the rally onward.
BCH PriceFollowing the strong growth, Bitcoin Cash is now trading around the $219 level.
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