- The NUPL indicated that Bitcoin was in the bullish phase.
- Reserves on the exchanges fell, indicating the preparations for a long rally.
Bitcoins [BTC] The rejection of a breach of $20,000 has sparked discussions about the possibility of an early bull market. While BTC’s year-to-date (YTD) performance has been relatively upbeat, several investors have pointed out that Bitcoin’s halving is a catalyst for a broadly profitable season.
To read Bitcoins [BTC] price prediction 2023-2024
However, there is one metric that has historically proven crucial for identifying bull cycles and their impact early stages. And that is the net unrealized gain and loss (NUPL).
BTC is in the pre-believe stage
The NUPL is calculated as Difference between the relative unrealized gain and the relative unrealized loss. According to Glassnode, that figure was 0.33 at press time. But in the past, the metric has been crucial in selecting phases of capitulation, optimism, and euphoria.
Interestingly, these feelings are highlighted by different colors and seem to have a unified path. For example, Bitcoin moved into a zone of hope (orange) after the 2015 capitulation (red). Next up was optimism (yellow). And finally, Faith (green) confirmed an uptrend that brought profits to many holders.
Source: Glassnode
A similar case occurred between 2018 and 2019 and between 2020 and 2021. At this point, BTC price was clearly moving higher due to severe downtrends. Now the NUPL means massive accumulation. This was because it had entered the zone of optimism after exiting the zone of surrender and hope.
If the NUPL continues to follow history, it could only be a few months before the bull market really begins.
From the reserves to the future
Meanwhile, on-chain analyst SimonaD also emphasized the optimism in the market. The analyst explained her stance, citing Bitcoin reserves on Coinbase.
According to SimonaD, BTC reserves on the exchange have fallen by 40% since May 2022. She also stressed that BTC has undergone a correction in this period up to its most recent level decrease in volatility.
Source: CryptoQuant
When this happens, it means that investors are convinced that Bitcoin’s value as a medium of exchange could soon improve. Therefore, these investors take big bets about the future price development of bitcoin.
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Also, the coin price can become more volatile. SimonaD said in her analysis published on CryptoQuant:
“Taking into account the level of outflows and the decline in bitcoin reserve, we can assume that bitcoin accumulation on the Coinbase exchange has been relatively constant from May 2022 to now, which can only be positive for bitcoin.”
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