The value of the Bitcoin NUPL indicator has just decreased dramatically, indicating the beginning of the early bear market period.
According to Glassnode’s most recent weekly analysis, the recent trend of the BTC NUPL may indicate that the early bear market has begun. The “Net Unrealized Profit and Loss” (or NUPL) is an on-chain indicator that calculates the difference between the relative unrealized profit and loss.
In layman’s words, this indicator tells us if the Bitcoinsystem as a whole is now profitable or losing money. The indicator works by examining each coin on the chain and determining whether its current price is lower or higher than its purchase price.
When the NUPL value is greater than zero, it indicates that the Bitcoin network as a whole is now profitable. On the other hand, negative values indicate that investors are now losing money.
Historically, the greater the deviation from zero, the closer the price was to a top or bottom (depending on which way of zero the metric currently points).
Now, here’s a chart that shows the Bitcoin NUPL’s trend over the coin’s history:
As illustrated by the graph above, the Bitcoin NUPL has recently dropped drastically, and its current value is 0.325. This means that 32.5 percent of the cryptocurrency’s market worth is currently held as unrealized profit.
As the colors in the chart show, the indicator’s current value appears to be in a location that has historically suggested an early bear market trend.
Over the last year, there has also been a negative divergence. As a result, all NUPL indicators point to the start of a new bear market.
An interesting feature is that comparable values were present after the May 2021 catastrophe. Thus, in a sense, a bear market began at the same time, but it only lasted a few months.
At the time of writing, the price of Bitcoin is hovering around $36.4k, down 13% in the last seven days. The value of the cryptocurrency has dropped by 28% in the last month.
The chart below depicts the price trend of BTC over the previous five days.
