On-chain data shows that the Bitcoin NUPL metric has now dropped to lows not seen since the COVID-19 crash in 2020.
Bitcoin’s net unrealized gain and loss has been falling recently
As one analyst explained in a CryptoQuant post, the past NUPL trend could indicate that the current readings could be favorable for a crypto price rally.
The “net unrealized gain and loss”, or NUPL for short, is an indicator defined as the difference between the current bitcoin market cap and its realized cap divided by the market cap.
The “realized cap” looks at what price each coin on the chain last moved at and uses those prices to calculate the crypto’s capitalization (whereas the normal market cap assumes the sum of the value of all coins at the current price).
This metric tells us whether overall BTC market participants are currently making gains or losses.
If the value of the ratio is above zero, it means that the overall market is currently making gains. On the other hand, readings below zero mean that the holders are currently suffering a loss.
Related Reading | Bitcoin Selling Pressure Continues as Long-Term Holder SOPR Increases
Of course, when the metric is exactly zero, it suggests that investors as a whole are currently breaking even.
Now here is a chart showing the trend of the Bitcoin NUPL metric over the last few years:
It seems like the value of the metric recently touched the green | Source: CryptoQuant
As you can see in the chart above, the quant has marked the different zones of the Bitcoin NUPL indicator with different colors.
It looks like the ratio has seen some decline recently, and its value has now fallen into the “green” zone for the first time since the COVID-19 crash.
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In the history of crypto, there have been several instances when shortly after the indicator touched this zone, the price saw an upward move.
But there is also the example from 2018, where the Bitcoin NUPL moved sideways in the green zone for a long time until finally the coin’s value experienced a sharp drop and brought the market into the red.
It now remains to be seen whether the crypto will follow the pattern of a recovery this time or show a trend similar to 2018.
BTC price
At the time of writing, the price of Bitcoin is hovering around $30.2K, down 1% over the past week.
It looks like the price of the crypto has been trading sideways around $30,000 lately | Source: BTCUSD on TradingView Featured image from Unsplash.com, Charts from TradingView.com, CryptoQuant.com
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