According to on-chain data, the Bitcoin NUPL has fallen to levels not seen since the COVID-19 disaster back in 2020.
Bitcoin Net Unrealized Profit and Loss Dropped Recently
As explained by an analyst in a CryptoQuant post, the NUPL past trend may suggest that current values could be favorable for a rebound in the crypto’s price.
The “net unrealized profit and loss,” or NUPL in brief, is an indicator that’s defined as the difference between the current Bitcoin market cap and its realized cap, divided by the market cap.
The “realized cap” checks what price each coin on the chain was last moved at, and using these prices it calculates the crypto’s capitalization (while the normal market cap takes the sum of all coins’ value at the current price).
This metric shows us whether all participants in the BTC markets are making a profit at the moment.
If the ratio’s value is greater than zero it indicates that the market overall is currently in profit. Conversely, a ratio of less than zero indicates that holders are currently in loss.
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The metric of exactly equaling zero indicates that investors are only breaking even at the moment.
Below is a chart of the Bitcoin NUPL Metric over the years.
According to CryptoQuant, it seems that the value for the metric is now in the green zone. Source: CryptoQuant| Source: CryptoQuant
You can see that quants have marked various zones on the Bitcoin NUPL indicator in this graph with different colors.
It looks like the ratio has observed some decline recently, and its value has now plunged down into the “green” zone for the first time since the COVID-19 crash.
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There have been many instances in the history of crypto where the price moved up shortly after it touched this area.
But, 2018 was also a case in point. The Bitcoin NUPL moved sideways for quite a while in the green area, and then the price of the cryptocurrency plunged, making it a loss leader.
Now it remains to see if the trend of crypto rebounding or following a similar pattern to 2018’s.
BTC price
At the time of writing, Bitcoin’s price floats around $30.2k, down 1% in the past week.
It seems like crypto's price has moved sideways at $30k in recent weeks. Source: TradingView.| Source: BTCUSD on TradingView
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts