The Bitcoin NUL indicator, which is based on data from the blockchain shows that it is below the value of 0.50. This is a signal that the cryptocurrency could still be experiencing a downtrend.
Bitcoin net unrealized losses rise, but still remains below 0.5
As pointed out by an analyst in a CryptoQuant post, the cryptocurrency’s price may still be nowhere near a bottom.
The relevant indicator here is the “net unrealized loss” (or NUL in brief), which tells us about the total number of coins that are currently holding an unrealized loss.
It works by using the most recent value of Bitcoin to compare the selling price for each of the coins in the chain. A coin that is currently losing money if its previous selling price was higher than the current value of Bitcoin will be considered a loss.
The current price of the coin being higher than the previous selling price would also indicate profit.
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NUL does not include the coins of this type. A second indicator is the net unrealized gain (NUP). This measures the former category.
Here’s a chart showing the Bitcoin NUL trend over time:
Recently, the indicator's value seems to be rising | Source: CryptoQuant
The graph above shows that the quant marked two zones in the Bitcoin NUL. A dividing line of 0.5 lines is drawn between the areas.
It looks like historically, the price of the crypto has tended to observe the major bottoms when the indicator’s value has been greater than 0.5
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You can see that NUL has been showing some improvement in recent months. Because Bitcoin’s value has declined during the period, more coins have gone underwater.
However, despite this recent rise, it seems like the net unrealized loss’ current value is still well below the 0.5 level.
If past trend is anything to go by, Bitcoin may observe further downtrend in the coming future before the NUL’s value exceeds the threshold and a bottom is formed.
BTC price
At the time of writing, Bitcoin’s price floats around $29.7k, up 3% in the last seven days. The crypto’s value has fallen 23% over the last month.
Below is a chart showing the change in coin price over the past five days.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Unsplash.com's featured image. Charts by TradingView.com. CryptoQuant.com chart.