Bitcoin has crashed to $58k, and on-chain data may suggest that profit-taking from short-term holders may be behind the event.
On-Chain Data Shows Bitcoin Short-Term Holders Are Taking Profits
The metric judges so by taking the ratio between the price a coin was bought for and what it was sold at. Values higher than one suggest investors are selling, on average, at some profit.
For short-term holders, the indicator is modified to include only those coins that were held for less than 155 days before being sold. This new metric is called the short-term holder SOPR (or the STH-SOPR in short).
It looks like short-term holders have started realizing their profits recently | Source: CryptoQuant
As the above graph shows, the indicator has started showing many positive spikes recently. And today there were two large spikes, following which the price of Bitcoin crashed to $58k.
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Here is another chart, this time for the spot exchange inflow, which shows the total amount of BTC flowing into spot exchange wallets:
The indicator's value shows a large spike in the last few hours | Source: CryptoQuant
As the above graph shows, the spot exchange inflow also observed a large spike before the crash, showing that some investors dumped a big amount of Bitcoin at that time.
The analyst in the post thinks that the short-term holders taking profits and this large inflow to spot exchanges (which may or may not be due to STH) could be a signal of the first major profit taking in the market in a long time. This may mean that this dip could turn out to be a good buying opportunity.
The below chart shows the trend in the price of the coin over the last five days.
BTC's price crashes down to $58k, but has since rebounded back above a little | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com