The price of Bitcoin (BTC) ended the week on a good note after making a late rally on Friday, September 13. This recent price upswing has led to talks about the Bitcoin price making a comeback following a horrendous start to September.
Interestingly, the latest on-chain data suggests that the ongoing price recovery might not exactly be what it looks like. So, what then is happening with the price of Bitcoin?
In a post on the X platform, popular crypto analyst Ali Martinez shared an on-chain observation that could offer insight into recent Bitcoin price action. The relevant indicator here is Santiment’s transaction volume metric, which monitors the total amount of a cryptocurrency transacted within a given time interval.
Historically, the transaction volume metric can be associated with the strength and direction of the market’s price trends. According to Martinez, Bitcoin’s transaction volume tends to rise during periods of upward price movement, as the market is usually more active. On the other hand, BTC’s transaction volume typically decreases during a price downtrend, as market participants engage less in buying and selling activities.
As of now, the Bitcoin transaction volume continues to fall, implying that even though the Bitcoin price seems to be recovering, a definitive trend reversal has not yet occurred. This sustained decline in volume indicates market uncertainty, suggesting that the price of Bitcoin may continue to consolidate or even experience further downward movement.
The reduced market activity could be associated with the bearish history of BTC in September, with investors likely choosing to navigate the market with more caution. Ultimately, this indicates that the latest Bitcoin rally may be short-lived, with the premier cryptocurrency likely not to build on its recent momentum.
It appears that some Bitcoin holders are not waiting for the flagship cryptocurrency to resume its bull run to cash in on their profits. For instance, on-chain data shows that some large investors accrued a significant amount in profit following the recent Bitcoin price rally above $60,000.
Ali Martinez revealed in a separate post on X that BTC whales took advantage of the recent price spike to realize more than $50 million in profits. This is based on an increase in long-term holder whales’ realized profit (in USD), implying that old large investors sold their coins at a higher price than the acquisition price.
This level of profit-taking can be a negative signal for the premier cryptocurrency, as large sell-offs can cause downward pressure on the Bitcoin price. Interestingly, the price of BTC has not made any significant movement in the past day and continues to hover around the $60,000 level.
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