Realized Profits at 8-Month Low: Is Perfect Setup for a Breakout?

The market for Bitcoin has recently stayed in a precarious equilibrium. Low realized profits and waning demand signals actually appeared to support it, increasing the likelihood of a direction change in the near future.

Bitcoin was trading at about $103,000 at the time of writing, and its realized profits (7DMA) were just under $1 billion, which is a level not seen since late October 2024. Moreover, profit-taking has remained muted despite a recent local high, which is consistent with the trend of modest realized profits.

Traders Turn Bullish as Bitcoin Derivatives Market Heats Up

But there was a worrying change indicated by the Large Holders Netflow statistic. In just the last seven days, net flows dropped by an astounding 191.44%. Evidence that the accumulating patterns of whales were drastically diminished.

During April and May, net flows remained largely neutral. So far, though, June has seen a steady decline. This implied that some big holders might be distributing cautiously or retrenching. Bitcoin will become more vulnerable to negative risk in the absence of its consistent inflows.

Why Are Bitcoin Bulls Losing the Battle in the Futures Market?

However, the outlook for the derivatives markets has also not been encouraging. Indeed, dYdX’s consistently negative funding rates suggested that traders might be leaning bearish and placing bets against a long-term advance.

All of the long’ attempts to catch up have rapidly failed. Not even quick flips into positive territory held. Buyers will probably find it difficult to reclaim any control until funding rates consistently remain stable or turn positive. Bitcoin would become susceptible to speculative sell-offs as a result.

Bitcoin Profitability Drops as MVRV Z-Score Slips: Is a Sell-Off Coming?

Earlier in June, the MVRV Z-score peaked locally at 2.97 and then dropped to 2.47. After a strong May gain, this decline may indicate waning unrealized profits. Holders, particularly short-term ones, may be less inclined to stay put if they don’t have sizable unrealized profits to fall back on. LTHs have also been resisting departure triggers, which has resulted in a deadlock with no apparent way out.

Bitcoin’s NVT and NVM Ratios Spike: Is a Crash Looming?

Lastly, some of the on-chain valuation models for Bitcoin may be showing warning signs at the moment. The NVT and NVM ratios, for example, increased by 37.78% and 27.45%, respectively. These surges hinted at a widening gap between network utility and market capitalization.

Such divergences have preceded either long-term sideways drift or abrupt corrections in previous cycles. In relation to its on-chain activity, Bitcoin may appear overpriced, with the NVT at 45.83 and the NVM at 3.05. The price may be more influenced by crowd sentiment than by natural increase.

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