Bitcoin NUPL Metric Signals Start Of Early Bear Period

Keshav Verma

1 year ago

3 mins read

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Bitcoin NUPL indicator has sharply dropped in value recently, a trend that may signal the start of the early bear market period.

After The Crash, Bitcoin NUPL Value Has Declined To 32.5%

According to the latest weekly report from Glassnode, the BTC NUPL’s recent trend may suggest that the early bear market is now beginning.

The “Net Unrealized Profit and Loss” (or NUPL in short) is an on-chain indicator that measures the difference between the relative unrealized profit and the relative unrealized loss.

NUPL = (Market Cap – Realized Cap) / Market Cap

In simpler terms, what this metric tells us is whether the Bitcoin market as a whole is currently in a state of profit or of loss.

The indicator works by looking at each coin on the chain and checking whether its current price is lower or higher than the price it was bought at.

When the NUPL value is above zero, it means the overall Bitcoin network is currently in profit. On the other hand, negative values imply investors are, on average, in loss at the moment.

Historically, the more the indicator has deviated from zero, the closer the price has been to a top or a bottom (depending on which way of zero the metric currently points).

Now, here is a chart that highlights the trend in the Bitcoin NUPL over the history of the coin:

Looks like the metric's value has sharply declined recently | Source: The Glassnode Week Onchain - Week 4, 2022

As the above graph shows, the Bitcoin NUPL has sharply declined recently, and its value is now 0.325. This means that currently 32.5% of the crypto’s market cap is being held as unrealized profit.

The indicator’s current value seems to be in a region that has historically signaled an early bear market trend, as the colors in the chart highlight.

The trend over the past year has also been that of a bearish divergence. Therefore all NUPL signs are that this may now be the beginning of a new bear market.

An interesting fact is that similar values were also there following the May 2021 crash. Thus in a sense, a bear market also started then, but it only lasted for a few months.

BTC Price

At the time of writing, Bitcoin’s price floats around $36.4k, down 12% in the last seven days. Over the past month, the crypto has lost 28% in value.

The below chart shows the trend in the price of BTC over the last five days.

BTC's price plunged to $33k yesterday, but has since recovered back above $36k | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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