Bitcoin NUPL Indicates Bull Phase May be Ending
A cryptocurrency analyst has identified a bearish signal in the Bitcoin Net Unrealized Profit/Loss (NUPL) indicator, suggesting that the current bull phase may be coming to an end. The NUPL measures the net amount of unrealized profit or loss held by investors in Bitcoin. By analyzing the on-chain history of each token, the indicator calculates the difference between the price at which a coin was last moved and its current price. Positive values indicate overall profitability, while negative values suggest underwater supply.
Historically, when the Bitcoin NUPL surpasses the 0.6 level, it has often signaled a potential market top and preceded a correction. Although Bitcoin briefly exceeded this level during the recent rally, it has rarely been able to sustain above it. The only exceptions were during the bull runs in 2017 and the first half of 2021. Interestingly, previous ATHs have occurred shortly after entering this overheated zone, typically leading to a significant correction within three to six weeks.
Possible Steep Correction for Bitcoin
Based on this historical pattern, there is a possibility of a steep correction for Bitcoin in the near future. Investors who are currently in profit are more likely to sell their coins as their profits increase. This tendency to sell intensifies at higher values of the NUPL. Therefore, it is likely that we will see selloffs as the NUPL remains at elevated levels.
BTC Price
As of now, Bitcoin is trading at around $63,000, experiencing a 12% decline over the past week.
[Chart showing Bitcoin NUPL trend over time]Note: This article is not financial advice. Cryptocurrency investments are subject to risk, and readers should do their own research before making any investment decisions.
Hot Take: Is the Bull Run Coming to an End?
The Bitcoin NUPL indicator is suggesting that the current bull phase may be nearing its end. Historically, when the NUPL exceeds the 0.6 level, it has often signaled a market top and preceded a correction. Given that Bitcoin has been in the “overbought” zone for almost three weeks now, it aligns with previous patterns where a stronger correction in price occurred within three to six weeks.
While this bearish signal does not guarantee an immediate downturn, it does indicate that caution is warranted. Investors should closely monitor the market and be prepared for potential volatility ahead. It’s important to remember that cryptocurrency investments carry risks, and it’s always advisable to do thorough research and seek professional advice before making any investment decisions.
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