What Does The Realized Profit Indicator Say?

• Ali Martinez has spotted a consistent pattern in the Bitcoin price behavior.
• Bitcoin market tops in the last seven years coincided with the realized profit.
• Realized profit monitors the overall behavior and market sentiment of participants.

Crypto analyst Ali Martinez has identified a recurring pattern in Bitcoin’s price action that connects with the Bitcoin market’s realized profit. In an X post, Ali demonstrated how Bitcoin market tops over the past seven years have lined up with realized profit, including events in March and May of this year.

From 2017 to the present, Martinez found six distinct tops in the Bitcoin price trend. Each top involved a significant rally, ending with sharp price reversals or gradual pullbacks in consolidation. Notably, the cryptocurrency’s realized profit spiked with each rally, culminating in a BTC price top.

Realized profits in the Bitcoin market represent the value users retain after selling or locking in their assets. For example, Bitcoin traders who bought at lower prices often sell some or all of their holdings when the price rallies. In essence, they close their trades, especially those who trade with leverage, or convert their Bitcoin to stablecoins or fiat.

Bitcoin traders and investors use the realized profit indicator as a market analysis tool. It tracks overall behavior and market sentiment, helping technical analysts determine when a rally’s momentum might be ending.

Realized profits are tracked over specific periods, providing a snapshot of the prevailing market sentiment. Relatively low realized profit can indicate that most investors are losing money, with the price trading below their entry point. It could also mean that investors anticipate higher prices and are therefore holding onto their assets.

Read also: Data Shows Average Bitcoin Investor Sitting on Big Profits Despite Dip

Martinez’s recent post shows that Bitcoin’s realized profit is low, suggesting that users expect BTC to rally higher. Trading at $63,871 at the time of writing, Bitcoin is 13% below its record price. However, BTC has climbed about 30% from its recent pullback after reaching an all-time high.

Many analysts think the flagship crypto may be gearing up for another bull run that would push it past its current all-time high. Indicators like realized profit support this expectation, showing that the cryptocurrency is still far from the profit target of most traders and investors.