Risk to the Bitcoin course? – What the current on-chain data tells us about BTC

The Bitcoin (BTC) price has fallen sharply and is recording great losses. The Bitcoin course quickly lost value. This is also known as a BTC dump. The picture shows a crumbling Bitcoin price on a descending price graph.

Anyone who bet on the Bitcoin course this year was not disappointed. More and more investors from different asset classes are discovering the advantages of BTC for themselves. Fundamentally, we see that there is a significant increase in the number of people holding Bitcoin. What initially sounds very positive for the price can also turn out to be a danger.

In this article we show the dangers lurking for the Bitcoin price and how on-chain data can help us with this analysis.

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What are the dangers for the Bitcoin course?

Since 2020 we have seen a continuous outflow of Bitcoin on exchanges. This means that more BTC is constantly flowing out of the exchanges than is flowing in. This is to be viewed positively at first, as it reduces the available supply of Bitcoin.

The scarce supply on the stock exchanges, in turn, has a price-driving effect on the Crypto Bank price. On the other hand, it may also cause confusion that – despite the price increases of BTC – Bitcoin is flowing away from the exchanges. If you don’t keep your cryptocurrencies on the exchanges, you are safer on the way, but you cannot trade them either. In other words: owners cannot simply sell and thus participate in profits on the Bitcoin course.

However, this HODLer mentality can also pose a threat to the Bitcoin course. What is the idea behind it and how this can be substantiated, let’s take a look now:

We use the following graphic from Chainalysis as a basis .

When are profits realized?

In the graph above we can see the distribution of investors‘ profits in USD. An example: Almost 5 million addresses are currently in a profit zone between 5 and 25%.

So far so good. Where is the supposed danger that we interpret for the Bitcoin course?

We will get the answer if we take a look at the red bar on the right edge of the graph. Here we see the number of addresses that are over 100% in the profit zone. In other words, these are the addresses that have at least doubled their stakes in US dollars.

Is 100% growth in the Bitcoin price already a reason to sell?
This number has risen sharply since the beginning of the year and is now between 6 and 7 million addresses. Despite the strong HODL mentality, the question of realizing profits arises.

When will investors take their profits? – Is it enough to double the profit? At this point one should not only think of the „small“ private investors, but above all of institutional investors.

If many investors decide to take their profits with them, this can have a negative impact on the Bitcoin price. It is important to understand that we are talking about probabilities and possibilities. At the moment we see no evidence of this.