The on-chain data shows that the Bitcoin NUPL metric has returned to a positive value, suggesting that the market as a whole is profitable again.
Bitcoin NUPL’s latest trend could signal that the bottom is already in place
As one analyst pointed out in a post on CryptoQuant, BTC NUPL breaking above neutral market may be a sign that bottom has set in.
There “Unrealized net profit/loss(or “NUPL” for short) is an indicator defined as the difference between market capitalization and realized capitalization, divided by market capitalization.
In simpler terms, what this metric tells us is the profit/loss ratio among investors in the current Bitcoin market.
The indicator works by looking at each coin’s on-chain history to see what price it was last moved at. If that sell price of any coin was lower than the current value of BTC, then that particular coin holds some profit right now. Otherwise, it is at a loss at the moment.
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When the value of the NUPL is greater than zero, it means investors in the Bitcoin market as a whole are in profit. On the other hand, the value of the indicator being negative implies that the overall market is currently in a state of loss.
Now, here is a graph that shows the trend of BTC NUPL over the past few years:
The value of the metric seems to have surged up in recent days | Source: CryptoQuant
As you can see in the chart above, the quant has marked the relevant bear market trending areas for Bitcoin NUPL.
It seems that sometime after plunging deep below zero, a bounce back to positive values was a sign of bottoming in previous bear markets.
Currently, the indicator has returned to a positive value after observing a surge recently. That means investors as a whole are slightly in profit right now.
Based on past cycles, this trend could imply the bottom has already participated in this Bitcoin bear market.
However, as the chart shows, a break from the green NUPL values does not necessarily mean the end of the bear. He only indicated that the crypto has already faced the worst.
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Past bear markets have lasted much longer than the current one, so it’s possible that if a similar pattern follows, the market could fall back into loss and move sideways for a while, before proper bullish momentum builds. developed.
BTC price
At the time of writing, The price of bitcoin is floating around $22,600, up 10% in the past week.
BTC has slumped down during the last 24 hours | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com