Bitcoin has shown a significant recovery, reclaiming the $100,000 milestone yesterday. It trades at $101,805, marking a 1.4% increase over the past 24 hours.
Amid this price performance, analysts have closely examined various metrics to gauge potential market movements, including identifying optimal cash-out moments. Meanwhile, recent data intriguing patterns that could guide investor strategies.
When Should You Cash Out Your Bitcoin?
One key insight shared by a CryptoQuant analyst, Onchain Edge, highlights a critical signal for when investors should consider reducing their Bitcoin holdings. Other metrics suggest a resurgence in buyer activity, reinforcing optimism in Bitcoin’s ongoing rally.
Onchain Edge emphasizes the importance of the BTC supply loss percentage as a marker for peak market phases. He notes that when this metric drops below 4%, it could signify the culmination of a bull market and the beginning of an overheated market phase.
Currently, the current supply loss percentage stands at 8.14%, providing room for further price growth before a potential peak. The analyst warns, however, that failing to act at the right time during such peak phases could lead to substantial losses in a subsequent bear market.
Elaborating on his analysis, Onchain Edge encourages investors to consider dollar-cost averaging (DCA) out of their positions once the supply loss percentage breaches the 4% threshold.
It is worth noting that this strategy by Edge could help mitigate the risk of holding through the transition into a bear market. Historically, peak bull run phases are characterized by significant profits among market participants, often followed by sharp corrections. Investors can protect their gains by exiting strategically while preparing for lower entry points during future market downturns.
BTC Buyer Activity Resurges
Meanwhile, in a separate analysis, another CryptoQuant analyst known as Crazzyblockk on the behavior of takers on Binance, one of the largest cryptocurrency exchanges. Data from the Taker Buy/Sell Ratio shows a shift toward aggressive buying activity.
This metric, which compares the volume of buy orders filled by takers to sell orders, had experienced a period of negative monthly values, indicating a preference for selling among market participants.
However, the ratio has recently turned positive, signifying renewed interest from buyers. This trend suggests reduced selling pressure and growing optimism among traders about Bitcoin’s potential price increase.
According to Crazzyblockk, sustaining this momentum is critical for maintaining the bullish trajectory, particularly as Bitcoin consolidates around the psychologically significant $100,000 level.
Featured image created with DALL-E, Chart from TradingView