Are you making a profit or loss when buying a bitcoin dip?
During the 2013 cycle, Bitcoin price fell nearly 80% before rebounding sharply to hit a new all-time high. As for the recent upswing, analysts are examining whether the recovery will be of a similar magnitude and whether the indicators are signaling long-term profitability.
Percentage of profitable companies in Bitcoin || Source: Glass knot
The graph above shows the percentage of profitable units in Bitcoin at different time periods and different price levels. Percentage of profitable companies that match the price levels from January 2018 and May to September 2019.
Although it reached a similar level in May 2020, it does not reach the 2018 level. The percentage of profitable units depends on factors such as HODLer composition, bitcoin dominance, number of addresses, bitcoin activity and transaction volume .
Bitcoin’s long-term returns are more dependent on historical trends and Bitcoin’s movements in major wallets, and traders calculate their profits based on the recovery. The percentage of wallets that are profitable after the drop largely depends on the HODLer composition or the time of purchase.
To calculate your profit on Bitcoin that you made during the price drop, you need to consider Bitcoin’s long-term and short-term ROI. The short-term ROI based on Messari data is shown below:
BTC Short Term ROI | Source: Messari
Over the 30 and 90 day periods, the ROI was largely negative last week. It will be calculated after the drop and flash crash in May 2021. However, the ROI last year is + 262%. Bitcoin is currently headed for a negative quarter, the biggest negative since 2018, based on data from Skew.
A new metric for determining your entry / exit timing that determines your profitability on Bitcoin is indicator by the renowned analyst Byzantine General on tradingview. A simple visualization of long and short will likely help traders xDetermine when a variable appears in the profit calculation that you can control, price and entry time.
Long and short in the market determine the funding rate, which has affected the psychology of traders. For example, a negative funding rate has had a positive effect on sentiment since the beginning of 2020. This is a useful retail indicator.
According to Ambcrypto