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Has Bitcoin Hit Bottom Yet? Here’s What On-Chain Data Says


Bitcoin continued to crash down yesterday, with the coin hitting as low as $21k before rebounding to current values. Has the crypto made the bottom yet?

Bitcoin NUPL Indicator Assumes Negative Values For First Time Since 2020

As pointed out by an analyst in a CryptoQuant post, the NUPL metric has declined below zero, which could be a sign that the crypto may be approaching a bottom.

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

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

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

On the other hand, values of the metric less than zero imply the Bitcoin market as a whole is now holding an unrealized loss.

Now, here is a chart that shows the trend in the BTC NUPL over the last few years:

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

As you can see in the above graph, the Bitcoin NUPL has sharply decreased in value over the past couple of days as the price of the crypto has observed a crash.

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

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

The last time the indicator dropped this low was back in March 2020, following the crash caused by the onset of COVID-19.

Historically, Bitcoin has approached a bottom whenever the NUPL metric has reached a negative value of around 0.2.

This is because as the indicator decreases further in value, investors start going deeper into red, and the motive to sell starts dying down.

Related Reading | Bitcoin Weekly RSI Sets Record For Most Oversold In History, What Comes Next?

While the Bitcoin NUPL has now gone below zero, the metric’s value is still larger than it was during the previous bottoms.

So, if a similar trend as those past instances follows now as well, then BTC may have room to decline further still before the bottom is in.

BTC Price

At the time of writing, Bitcoin’s price floats around $22k, down 33% in the last seven days. Over the past month, the crypto has lost 27% in value.

The below chart 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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