As seen in a recent analysis from the crypto behavioural analytics platform Santiment, leading cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and XRP are facing risky waters. However, the data seems to indicate that all major cryptocurrencies contain their respective reserves in historically risky profit levels.
Considering the price action and the data on-chain, the chart presented by Santiment offered a comprehensive image. On the back end is a candlestick chart that follows Bitcoin price, in which green candles correspond to increases and red ones show decreases. The three lines representing BTC, ETH and XRP show the current proportion of the total circulating supply which is currently in profit.
As per the analysis, all three cryptocurrencies are currently in Santiment’s “Higher Risk Zone”, with over 80% of their current supply in profit. This area implies a higher chance of sell-off due to investors taking advantage of their gains.
Investors can utilise this data to make informed decisions about their cryptocurrency holdings. If historical patterns hold true, being in the Higher Risk Zone may indicate an impending price correction. Consequently, some investors may consider taking profits to safeguard their gains. Conversely, those confident in the market’s ability to sustain or grow from these levels might choose to hold or even increase their positions.
It is important however to note that historical context plays a vital role in interpreting this data. Past instances of the lines entering the Higher Risk Zone may provide insights into potential market behaviour. If these instances have consistently preceded price drops, it could suggest that the market is currently at risk of another downturn.
As of the latest data point on the chart, Bitcoin is priced at $42,732.23, down 0.25% in the last 24 hours and Ethereum is at $2,525.13, down 1.81%. Meanwhile, XRP stands at $0.565525, down 0.99%. These price fluctuations emphasise the importance of monitoring the market closely, especially in the face of high-risk profit levels.
Santiment’s analysis paints a cautionary picture of the cryptocurrency market. With a significant percentage of the total supply in profit, there is a heightened risk of a price downturn, mirroring historical trends. Investors should exercise vigilance and consider their strategies in light of this data, as the market continues its volatile journey.