• Ethereum, XRP, Bitcoin, Litecoin and Cardano have each recorded a high ratio of loss transactions compared to profit taking. 
  • The level of loss transactions in BTC, ETH, XRP, LTC and ADA climbed to a five-month peak.
  • The probability of a bounce in prices is higher as large volumes of loss transactions are considered a sign of a market bottom.

Bitcoin (BTC), Ethereum (ETH), XRP, Litecoin (LTC) and Cardano (ADA) have recorded one of the highest volumes of loss transactions compared to profit taking since March, in a possible sign that the price of these assets has reached a market bottom – or the lowest point after a downtrend – and that an upcoming rebound is in store.

Also read: Ripple’s XRP transactions are not securities even if SEC wins appeal in court, says attorney

Crypto market bottom signal flashes in ETH, XRP, LTC, ADA and BTC

According to data from crypto intelligence tracker Santiment, traders are becoming increasingly complacent when trading assets like BTC, ETH, XRP, LTC and ADA. Market participants have failed to find any traction on a rally in these cryptocurrencies since the week of March 1, 2023.

Santiment data shows that the number of traders registering losses compared to those who record profits when trading these cryptocurrencies is at its highest level since March. Historically, a high ratio of loss transactions when compared to any profit taking raises the probability of a bounce in asset prices. 

Ratio of on-chain transaction volume

Ratio of on-chain transaction volume profit/loss ratio for top assets as seen on Santiment

As seen in the chart above, at the beginning of March, when loss transactions were also prevalent, altcoin prices bounced shortly after, within a fifteen-day timeframe.

Since the week of March 1, there has been a spike in loss transactions in BTC, ETH, XRP, LTC and ADA vs profit taking transactions by users, despite the macroeconomic catalysts and other developments in the crypto ecosystem. If the trend repeats itself, a recovery in the prices of these assets is likely to occur in the short term. 

Analyst marks BTC bottom 

Crypto analyst behind the Twitter handle @CryptoJelleNL analyzed the Bitcoin price chart and noted that the asset is behaving similarly to the 2015 bear market bottom. If the trend signaled by the analyst plays out, a rally is likely within the next few months. 

The analyst marks the ongoing cycle as an accumulation season for a potential upcoming bull market, according to his thesis.

Macroeconomic developments like CPI and PPI releases over the past few weeks have suggested that Bitcoin price is likely sensitive to data releases and events. This could act as a factor in determining where the asset is headed next and whether market participants can expect a price rally soon. Checkout this post for more.

Bitcoin, altcoins, stablecoins FAQs

What is Bitcoin?

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

What are altcoins?

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

What are stablecoins?

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

What is Bitcoin Dominance?

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

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