Bitcoin [BTC] has seen a significant rise in its value in the past week. Although September didn’t start well for BTC, the recent price increases have offset the losses seen earlier in the month.
At the time of writing, BTC was priced at $63,668, reflecting a nearly 10% increase over the last week.
Looking at the monthly performance, BTC has made substantial gains, rising by 6.99% overall. After hitting a low of $52,546 on September 6th, the cryptocurrency has managed to recover from previous declines.
Despite the recent uptrend, Bitcoin is still far from its recent peak of $70,016, which was reached on July 29th. This sudden price movement has prompted discussions among analysts.
However, IntoTheBlock analysts are cautious about the recent rally due to the 5.1 million addresses that are currently facing losses.
5.1 million BTC addresses in the red
According to IntoTheBlock’s analysis, even as BTC tries to break past the $63k resistance level, many investors find themselves at a loss. The data indicates that 5.1 million addresses are currently holding BTC at a value lower than their initial purchase price.
This essentially means that 5.1 million wallets are underwater, implying that these investors bought BTC at a higher price than its current market value. Consequently, these investments have yet to turn profitable.
This situation suggests that a considerable number of investors are waiting for prices to rise further to either break even or make a profit. In such scenarios, investors can opt to sell at a loss to prevent further declines or hold on for a better selling opportunity.
If these holders decide to sell, they could exert selling pressure on the market, potentially slowing down the upward momentum. Alternatively, they may choose to hold on, anticipating further price increases.
Current market sentiment
Despite concerns raised by IntoTheBlock, the broader market has shown resilience over the past week.
During this period, Bitcoin has witnessed a notable decrease in Net Unrealized Loss (NUL), dropping from 0.026 to 0.009. This reduction suggests that the market is recovering, with many investors seeing their holdings nearing breakeven or profitability.
This development is positive as it indicates a shift from a downward market trend to a phase of price recovery, narrowing the gap between current prices and purchase costs.
Furthermore, Bitcoin’s Net Realized Profit/Loss (NRPL) has risen from $75.5 million to $860.2 million in the past week.
An uptick in NRPL signifies a positive market sentiment, with a significant number of participants realizing profits. This boost in confidence suggests that prices are likely to continue rising, attracting more buyers.
Additionally, Bitcoin’s Network Value to Metcalfe (NVM) ratio has been on a decline in recent days. This indicates increased network activity with the market yet to fully respond, suggesting potential for future price appreciation.
In conclusion, while 5.1 million addresses are still in the negative according to IntoTheBlock’s data, the overall sentiment in the BTC market has shifted from bearish to bullish. This positive sentiment positions Bitcoin for further price increases.
Therefore, if the current market sentiment remains positive, BTC is expected to challenge the $64,727 resistance level in the near term.