The Bitcoin NUPL value is now back at a positive value according to on-chain data, indicating that the entire market is in profit.
Bitcoin NUPL Trend May Signal That The Bottom Is In
In a CryptoQuant article, an analyst points out that BTC NUPL moving above the neutral market might be a signal of bottom.
The “Net Unrealized Profit/Loss” (or “NUPL” in short) is an indicator that’s defined as the difference between the market and realized caps, divided by the market cap.
This measure tells us, in simpler words, the profit/loss rate among current Bitcoin investors.
This indicator uses the history on each coin’s blockchain to determine its last price. If the selling price for any particular coin was lower than its current BTC value then it is in profit. It is currently in loss if it does not.
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Investors in Bitcoin markets as a whole will be in profit if the NUPL value is higher than zero. On the other hand, the indicator’s value being negative implies the overall market is currently in a state of loss.
Here’s a chart showing the BTC NUPL trend over several years.
Recent days have seen a significant increase in the value of this metric. Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the quant marked the bear market trends for Bitcoin NUPL.
After plunging to zero it seems like a rebound back to positive values was a sign that bottom formed during previous bear markets.
The indicator returned to positive values after experiencing a spike in recent months. The indicator is slightly profitable for investors in general right now.
This trend, which could indicate the bottom for Bitcoin’s bear market could be based on past cycles.
However, as is apparent in the chart, a break to green NUPL values doesn’t necessarily mean the end of the bear. This is a sign that crypto has been through the worst.
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Past bear markets have lasted for much longer than the current one so it’s possible that if a similar pattern follows, the market may drop back into loss and move sideways for a while, before a proper bullish momentum builds up.
BTC price
At the time of writing, Bitcoin’s price floats around $22.6k, up 10% in the past week.
BTC's price has fallen in 24 hours. Source: BTCUSD tradingview| Source: BTCUSD on TradingView
Featured image by Kanchanara at Unsplash.com. Charts from TradingView.com and CryptoQuant.com.