Bitcoin NUPL Metric Signals Start Of Early Bear Period
25 Enero 2022 - 1:00PM
NEWSBTC
Bitcoin NUPL indicator has sharply dropped in value recently, a
trend that may signal the start of the early bear market period.
After The Crash, Bitcoin NUPL Value Has Declined To 32.5% According
to the latest weekly report from Glassnode, the BTC NUPL’s recent
trend may suggest that the early bear market is now beginning. The
“Net Unrealized Profit and Loss” (or NUPL in short) is an on-chain
indicator that measures the difference between the relative
unrealized profit and the relative unrealized loss. NUPL = (Market
Cap – Realized Cap) / Market Cap In simpler terms, what this metric
tells us is whether the Bitcoin market as a whole is currently in a
state of profit or of loss. The indicator works by looking at each
coin on the chain and checking whether its current price is lower
or higher than the price it was bought at. When the NUPL value is
above zero, it means the overall Bitcoin network is currently in
profit. On the other hand, negative values imply investors are, on
average, in loss at the moment. Historically, the more the
indicator has deviated from zero, the closer the price has been to
a top or a bottom (depending on which way of zero the metric
currently points). Related Reading | Following Crash, Bitcoin
Open Interest Declines To Sept 2021 Levels Now, here is a chart
that highlights the trend in the Bitcoin NUPL over the history of
the coin: Looks like the metric's value has sharply declined
recently | Source: The Glassnode Week Onchain - Week 4, 2022 As the
above graph shows, the Bitcoin NUPL has sharply declined recently,
and its value is now 0.325. This means that currently 32.5% of the
crypto’s market cap is being held as unrealized profit. Related
Reading | Has Bitcoin Reached Its Bottom? Analyst Says It
Still Has A Long Way To Go The indicator’s current value seems to
be in a region that has historically signaled an early bear market
trend, as the colors in the chart highlight. The trend over the
past year has also been that of a bearish divergence. Therefore all
NUPL signs are that this may now be the beginning of a new bear
market. An interesting fact is that similar values were also there
following the May 2021 crash. Thus in a sense, a bear market also
started then, but it only lasted for a few months. BTC Price At the
time of writing, Bitcoin’s price floats around $36.4k, down 12% in
the last seven days. Over the past month, the crypto has lost 28%
in value. The below chart shows the trend in the price of BTC over
the last five days. BTC's price plunged to $33k yesterday, but has
since recovered back above $36k | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com,
Glassnode.com
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