- Unlike previous cycles, the current heated market may lead to a correction.
- If Bitcoin’s price decreases, high liquidity and volatility might send it back to the upside.
Following the price increase to $30,000, the Bitcoin [BTC] network has entered into a high-profit profit period. This information was disclosed by Alex Aldler Jr, a data analyst and Bitcoin research specialist.
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Alder, using the Bitcoin Realized Profit/Loss metric, showed that there have been a lot of profits made on-chain.
A realized profit or loss occurs when a cryptocurrency is sold for a higher or lower price than it was purchased. When the difference between the total consideration and cost basis is positive, it implies a realized gain. On the other hand, a negative difference infers a realized loss.
A hot market can’t stop the switch
According to the Bitcoin Realized Profit/Loss chart shared by the analyst, a lot of market players had made high gains. Historically, this hike was supposed to trigger a significant correction.
However, Adler noted that it might not happen this cycle due to the FOMO around the spot ETF applications and possible approval.
The #Bitcoin network has entered a High Profit Level period. Previous entries into this level significantly slowed growth and led to market corrections. However, due to #ETF FOMO, this time things might be different.#btc pic.twitter.com/SH1VrnX160
— Axel 💎🙌 Adler Jr (@AxelAdlerJr) October 22, 2023
Although the U.S. SEC has made it clear that the approval may be delayed until next year, many are still optimistic that one of the numerous applications will get a go-ahead before 2023 ends.
As a result, market players have committed to staying active in the market. This resolute stance has also been crucial to the BTC price only retracing slightly in the last few days.
Meanwhile, Bitcoin’s liquidation levels data from HyblockCapital showed there were aggressive buying at $29,886.
For context, liquidation levels are estimates of potential price levels where the position of leverage traders could be closed after reaching initial margins. Also, the cumulative liquidation level delta showed that there has been a lot of pressure on the buy side.
Source: HyblockCapital
BTC may fall, but it’s not the finish line
As a result, the price might fully retrace, creating a bearish bias in the process. Should Bitcoin fall to $29,000, and liquidity increase again in the market, then it could be a time to open more long positions.
In another post on X (formerly Twitter), Adler noted that active addresses may continue to increase on the Bitcoin network. This metric serves as a measure of crowd interaction around a coin.
During the first quarter of the year, Bitcoin active addresses reached impressive levels. This led to high volatility while bringing gains for BTC holders.
Read Bitcoin’s [BTC] Price Prediction 2023-2024
Although the analyst mentioned that the activity of the network has decreased compared to last week, he also noted that active addresses might resume their speculation soon due to the ETF FOMO.
Last week there was a record in the number of transactions on the network; the volume was equivalent to the spike seen in April.
Activity decreased over the weekend, but I don’t think it will impact the FOMO associated with the potential approval of an ETF.#BTC pic.twitter.com/8cgfO915Ay
— Axel 💎🙌 Adler Jr (@AxelAdlerJr) October 22, 2023
If activity jumps again, then volatility may become extreme and BTC may break the $30,000 resistance. In a case where the volume follows in the upward direction, Bitcoin could significantly surge above the aforementioned resistance.