Has Bitcoin already bottomed out? This is what the on-chain data says

Bitcoin continued to fall yesterday, with the coin hitting $21k before recovering to current values. Has crypto already bottomed out?

Bitcoin NUPL indicator assumes negative values ​​for the first time since 2020

As noted by an analyst in a CryptoQuant post, the NUPL metric has dipped below zero, which could be a sign that the crypto may be reaching its lowest point.

Bitcoin’s “net unrealized profit and loss” (NUPL) is an indicator that is defined as the difference between the market capitalization and the realized capitalization, divided by the market capitalization.

In simpler terms, what this metric tells us is whether the overall market is currently in an unrealized gain or loss.

When the value of the NUPL is greater than zero, it means that the investors as a whole are in a profit state at the moment.

On the other hand, metric values ​​less than zero imply that the Bitcoin market as a whole now has an unrealized loss.

Now, here is a chart showing the trend in BTC NUPL over the past few years:

Bitcoin NUPL

The value of the indicator seems to have plunged down recently | Source: CryptoQuant

As you can see from the chart above, the value of Bitcoin NUPL has dropped sharply in recent days as the price of the crypto has plummeted.

The indicator now has a negative value, suggesting that the overall BTC market is now at an unrealized loss.

Related Reading | Long-Term Bitcoin Holders Realize March 2020-Like Losses As BTC Crashes

The last time the indicator fell this low was in March 2020, after the collapse caused by the appearance of COVID-19.

Historically, Bitcoin has bottomed out whenever the NUPL metric has hit a negative value of around 0.2.

This is because as the value of the indicator declines further, investors begin to go deeper into the red and the reason to sell begins to fade.

Related Reading | Bitcoin Weekly RSI Sets Record for Largest Oversold in History, What’s Next?

While Bitcoin’s NUPL has now dipped below zero, the value of the metric is still higher than during previous lows.

So, if it now also follows a similar trend to previous instances, then BTC may have room to decline further before it bottoms out.

BTC price

At the time of writing, the price of Bitcoin hovers around $22,000, down 33% in the last seven days. Over the last month, the crypto has lost 27% in value.

The chart below shows the trend in the value of the coin over the last five days.

Bitcoin price chart

The price of BTC has crashed down over the last few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

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