On-chain data shows the Bitcoinย (BTC) Net Unrealized Profit and Loss (NUPL) has found rejection at the longstanding resistance zone recently.
Bitcoinย (BTC) NUPL Has Observed Several Decline In Recent Days
As stated by an analyst in a CryptoQuant post, the Bitcoin NUPL metric has failed to clear a major resistance. The โNUPLโ is an indicator that tells us about the degree of unrealized profit or loss thatโs asย ofย now being held by the investors.
By โunrealized,โ whatโs meant here isย theย factย that the holders have accumulated profits/losses ( owingย to the price being more/less than what they purchased the coins at), but they are isย still to essentially sell their Bitcoin to set them in stone.
Andย once such investors who are holding unrealized profits/losses do end up selling soonerย orย thereafter, the profits/losses they were previously holding are stated to be โrealized.โ
Andย once the value of the NUPL is moreย than zero, it means the average investor is carrying a profit on their coins atย thisย time. On the other hand, the indicator being below this threshold suggests the market as a whole is sitting on some loss currently.
The zero value of the metric itself naturally represents the break-even level, as the total amount of unrealized profits in the market equals the unrealized losses at this mark.
Now, here is a chart that shows the tendency in the Bitcoinย (BTC) NUPL, likewise as its 365-day moving average (MA), over the last few years:
In the over graph, the quant has marked the โ longstanding resistanceโ zone that the Bitcoinย (BTC) NUPL has seemed to have historically followed. This area, which lies in betwixt the values of 0.31 and 0.38, has been an important retest for the digitalย currency, as failure here has often meant the start of a drawdown.
Andย once coming from over, onย theย otherย hand, there have likewise been positiveย tendency retests of this zone, as the points marked by the green checkmarks in the chart display. A prominent example of such a successful retest was back in July 2021, when Bitcoin hit a local bottom and wentย ahead with the Second half of the 2021 bull run following it.
The example of a bearish resistance seemsย to have formed just recently, as the indicator entered the zone recently but has been rejected downwards. And with it, so has the assetโs price. Itโs uncertain isย still, but this rejection may have started an extended drawdown for the coin.
โGiven that the NUPL index has likewise formed a bearish Head & Shoulders (H&S) pattern, this could mean that Bitcoinย (BTC) could fall into the $24,000-$20,000 range,โ notes the quant. โWith the successful implementation of the H&S, the local uptrend of the NUPL index will likewise be broken.โ
The Bitcoinย (BTC) NUPL has likewise shown interesting interactions with its yearly MA in the past; the indicator has sometimes found resistance or support at this level as well.
โThe last frontier for maintaining Bitcoinย (BTC) bullishness is the 365-day MA, which acts as reliable longstanding support,โ reveals the quant. โFor the over scenario to be declared invalid, it is necessary to overcome longstanding resistance sustainably!โ
Bitcoin Price
Atย theย timeย ofย publication, Bitcoinย (BTC) is trading around $26,300, down 2 percent in the last week.
