Track the ROI of Bitcoin Trades Predictable Price Drop

At the beginning of the month, Bitcoin fell to a three-month low of $ 42,874 in a market-wide flash crash, erasing more than 20% of BTC’s value in a matter of hours.

follow report from analysts Santiment, an increase in an index that is often overlooked both before this month’s crash and last March’s sell-off, can be used to predict future price movements.

Tracking the ROI of Bitcoin transactions shows an interesting pattern

The recent Bitcoin crash has sent the entire crypto market into turmoil, all of them deep in the red. The 20% decline caused short-term panic among sellers and even shattered the confidence of long-term owners.

Fear, uncertainty and doubt are best expressed by looking at the Bitcoin network’s actual profit and loss graph, an indicator that tracks the ratio of total net return to total cost of investment – the return on investment (ROI) of all daily Bitcoin transactions are often overlooked.

To create the indicator, Santiment uses the details of each bitcoin that was moved on the blockchain and assumes that its redemption price is the price that was last moved. If Bitcoin changes address again, it will assume that this is the selling price.

The difference between the buying and selling price shows whether the bitcoins moving on the blockchain are being sold at a profit or a loss.

The graph shows the net profit / loss vs. Bitcoin price over the last 6 months | Source: Sanbase

This month’s crash caused one of Bitcoin’s largest NPL declines, showing that a significant portion of the BTC that moved over the weekend was lost.

While a sharp rise on the chart is certainly not enough to be a good predictor of market sentiment, it is worth noting that a similar fall occurred during last month’s correction. According to Santiment, the decline in Bitcoin’s NPL at the time showed wholesale speculation and heightened panic among weakly armed investors.

The graph shows the net profit / loss vs. Bitcoin price over the past 6 years | Source: Sanbase

“Overall, a sharp drop in Bitcoin’s NPL could be a sign of increased FUD among some groups of holders who are making moves in expectation that the price will continue to trend lower,” Santiment said in the report.

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