Bitcoin continued to fall yesterday, with the currency reaching $ 21,000 before bouncing back to current values. Has cryptography already reached the bottom?
The NUPL Bitcoin indicator assumes negative values for the first time since 2020
As one analyst pointed out in a CryptoQuant post, the NUPL metric has dropped below zero, which could be a sign that cryptography may be approaching the bottom.
Bitcoin’s “net unrealized gain and loss” (NUPL) is an indicator that is defined as the difference between the market capitalization and the realized maximum, divided by the market capitalization.
In simpler terms, what this metric tells us is whether the global market currently has an unrealized profit or a loss.
When the value of the NUPL is above zero, it means that investors as a whole are in a state of profit at this time.
On the other hand, sub-zero metric values imply that the Bitcoin market as a whole now has an unrealized loss.
Now, here is a chart showing the BUP NUPL trend over the last few years:
The value of the indicator seems to have dropped recently Source: CryptoQuant
As you can see in the chart above, the value of Bitcoin NUPL has dropped dramatically in recent days as the price of cryptography has seen a drop.
The indicator now has a negative value, suggesting that the global BTC market now has some unrealized losses.
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The last time the indicator fell so low was in March 2020, after the fall caused by the start of COVID-19.
Historically, Bitcoin has moved closer to the bottom as long as the NUPL metric has reached a negative value of about 0.2.
This is because as the indicator declines further in value, investors begin to delve deeper into the red and the reason to sell begins to decline.
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Although Bitcoin NUPL has now fallen below zero, the value of the metric is even higher than during previous funds.
Therefore, if it now also follows a similar trend to those of previous instances, then BTC may have room to decline further before the bottom is reached.
BTC price
At the time of writing, the price of Bitcoin is hovering around $ 22,000, down 33% in the last seven days. Over the past month, cryptography has lost 27% of its value.
The chart below shows the trend in the value of the currency over the last five days.
The price of BTC has fallen in recent days Source: BTCUSD on TradingView Featured image from Unsplash.com, TradingView.com charts, CryptoQuant.com