Yesterday saw Bitcoin continue to plummet, hitting $21k at the lowest before recovering to its current value. Is the cryptocurrency at the bottom?
Bitcoin NUPL indicator assumes negative values for the first time since 2020
A CryptoQuant analyst noted that NUPL has fallen below zero. This may indicate that the crypto market is approaching its bottom.
The Bitcoin “net unrealized profit and loss” (NUPL) is an indicator that’s defined as the difference between the market cap and the realized cap, divided by the market cap.
Simply put, this indicator tells you if overall market currently has an unrealized profit.
When the NUPL’s value is greater than zero, it means the investors as a whole are in a state of profit at the moment.
However, the Bitcoin market in general is currently experiencing an unrealized loss if the value of the metric falls below zero.
Below is a chart that illustrates the BTC NuPL’s trend over recent years.
Source: CryptoQuant| Source: CryptoQuant
The above graph shows that the Bitcoin NUPL’s value has dropped sharply in recent days, as the cryptocurrency price has crashed.
This indicator has now a negative value, indicating that there is an unrealized amount of BTC in the market.
Similar Reading: Bitcoin long-term holders realize March 2020-Like losses as BTC crashes| Bitcoin Long-Term Holders Realize March 2020-Like Losses As BTC Crashes
This indicator was last seen at its lowest point in March 2020 after the crash caused by COVID-19.
Bitcoin is a cryptocurrency that has seen a decline in value when its NUPL metric reaches a negative value around 0.2.
Because as the indicator’s value decreases, the investors begin to go deeper into the red and sell less.
Bitcoin Weekly RSI Sets Record For Most Oversold In History, What Comes Next?| Bitcoin Weekly RSI Sets Record For Most Oversold In History, What Comes Next?
While the Bitcoin NUPL has now gone below zero, the metric’s value is still larger than it was during the previous bottoms.
If a trend similar to those seen in the past continues now, BTC could have more room for decline before it reaches its bottom.
BTC price
At the time of writing, Bitcoin’s price floats around $22k, down 33% in the last seven days. The crypto’s value has fallen 27% over the last month.
Below is a chart showing the change in coin value over the past five days.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts