Bitcoin Sees 3:1 Profit-To-Loss Transaction Ratio—A Local Top Signal?

On-chain data shows the Bitcoin network has seen a spike in profit transactions, something that has often led into local price tops in the past.

In a new post on X, on-chain analytics firm Santiment has talked about the latest trend in the ratio of profit and loss transactions taking place on the Bitcoin network. A transfer is categorized as a ‘profit’ one when the tokens involved in it had a last transaction price lower than the latest one. Similarly, transfers with coins of the opposite type fall into the ‘loss’ category.

Below is the chart shared by Santiment that shows the ratio between the number of transactions falling in each group over the last few months.

As is visible in the graph, the ratio has witnessed a rapid surge for the Bitcoin blockchain recently, indicating profit transactions have outpaced the loss ones. Currently, the metric has a value of 2.95, which means that traders are making nearly three profit-taking moves for every loss-taking transfer. This is the highest level for the indicator in about 12 weeks.

In the chart, Santiment has highlighted past spikes in the metric. “Historically, this has been a short-term price top signal,” noted the analytics firm. Given this pattern, it now remains to be seen whether the latest surge in the ratio will also align with a local peak.

In some other news, Bitcoin started the weekend with the most fearful social media sentiment in five weeks, as pointed out by Santiment in another X post.

The indicator shown in the chart is the “Positive/Negative Sentiment,” tracking the ratio between bullish and bearish comments related to Bitcoin on the major social media platforms. This metric observed a drop to 0.81 on Saturday, corresponding to there being five negative posts for every four positive ones.

The trend naturally suggests that all the market uncertainty like the Iran war and continued lackluster BTC price action induced FUD among retail traders on social media.

While the market sentiment turned bearish, the analytics firm had noted in the post, “Remember that markets typically move the opposite direction of the crowd’s expectations.” Bitcoin has made some recovery to kickstart the new week, so it’s possible that this contrarian effect of the crowd mood may be what has once again affected the cryptocurrency’s trajectory.

Bitcoin has returned back to $69,200 following its recovery surge.