The new on-chain analysis, which indicates that Bitcoin has not yet formed a definitive bottom in its bearish cycle, revealed that the market may test weaker levels first. CryptoQuant specifically pointed out the long-term trend of the NUPL indicator, stating that similar bottoms in past bear markets were often shaped by this benchmark falling to lower levels.
Critical threshold highlighted in NUPL indicator
In the research published by CryptoQuant on Monday, the Net Unrealized Profit/Loss, or NUPL metric, which monitors the profit and loss situation in the Bitcoin supply, came to the fore. This indicator measures how much of the coins in circulation are held in profit or loss based on the price they last moved. The NUPL value currently stands at 0.158. This level was last seen in early 2023.
Mini dictionary: NUPL is an on-chain indicator that measures the unrealized profit or loss of Bitcoins held by investors. EMA, on the other hand, refers to the exponential moving average that gives more weight to recent changes in the data.
TheChessOnChain, which contributed to the research, said that NUPL data, when smoothed with 30- and 100-day exponential moving averages, becomes one of the clearest cycle indicators on the on-chain side. In the shared chart, it was seen that NUPL’s 100-day average was slowly approaching the cycle bottom regions below zero.
TheChessOnChain stated that Bitcoin forms a cycle bottom every time the 100-day average of NUPL falls below zero, and this was seen at the bottom after the end of 2011, the beginning of 2015, the 2018 bear market and the FTX crash in 2022.
Comparison with past cycles made
In the analysis, it was emphasized that the periods when NUPL’s 100-day average fell below zero corresponded to important bottom areas for Bitcoin. These included levels of around $2 in late 2011, $182 in January 2015, $3,206 in December 2018, and $15,792 in November 2022 following the FTX crisis.
| Period | Approximate bottom price | NUPL 100-day EMA status |
|---|---|---|
| end of 2011 | around $2 | below zero |
| January 2015 | $182 | below zero |
| December 2018 | $3,206 | below zero |
| November 2022 | $15,792 | below zero |
While Bitcoin is hovering just above $60,000, NUPL’s 100-day average is at 0.215. This chart indicates that there is still room for the indicator to move lower compared to previous bear market bottoms.
The zero line is followed, but is not considered a strict rule
CryptoQuant, however, also reminded that throughout the history of Bitcoin, NUPL has formed increasingly higher lows. For this reason, it is not considered necessary for the indicator to fall below zero again. In the research, it was noted that the previous four zero intersections should be considered as a recurring pattern, not an immutable rule.
CryptoQuant emphasizes that the key level to watch in the coming weeks is the zero line, but it is not possible at this stage to give a clear time frame for the next bottom.
Although various on-chain recovery signals reminiscent of the 2022 period have been seen in the market in recent weeks, a significant portion of investors think that new macro bottoms may come to the fore before the bulls regain control.
Other on-chain data also painted a cautious picture
Axel Adler Jr., one of CryptoQuant analysts. He also pointed out that the data on the supply side gives mixed signals in the short and medium-term price outlook. By Adler’s calculation, the amount of supply held at a loss could be about two months away from reaching areas where Bitcoin bear markets have historically ended.
For this reason, Adler argued that it would be more accurate to consider the surrender process in the market as an ongoing process, rather than as a completed event.
