Bitcoin Short Term NUPL Value Turns Negative, What This Means For Price
May 10 2024 - 10:00AM
NEWSBTC
Crypto analyst Onchained recently provided valuable insights into
an important metric that can be used to gauge the future trajectory
of Bitcoin. The analyst suggested there was no cause to worry at
the moment but highlighted what to watch out for to know the right
time to exit the market. Bitcoin Short-Term Holders NUPL
Turns Negative In a blog post, the analyst noted that the NUPL (Net
Unrealized Profit/Loss) for Bitcoin’s short-term holders recently
turned negative. The analyst added that this signals fear among
this category of investors, which is very much likely given
Bitcoin’s current price action. The last time this trend occurred
was shortly after the Spot Bitcoin ETFs were approved, with Bitcoin
dropping from $49,000 to $38,000 following that occurrence.
Related Reading: What Triggered The 6,350% Spike In XRP Long
Liquidations Compared To Shorts? Source: CryptoQuant While the
short-term holders’ NUPL turning red again suggests that a
significant price decline may be on the horizon, the analyst
remarked that this price level may simply represent a significant
support line. The real cause for concern might be when the NUPL for
mid-term holders also turns negative. “It could indicate widespread
market fear and serve as a crucial risk management indicator for
exiting the market,” the analyst claimed. It is worth noting
that the short-term holder’s NUPL being negative means they are
currently seeing an unrealized loss in their investments. This
could trigger a wave of sell-offs among these investors, mainly
because of fear that Bitcoin’s price could further dip. However,
based on the analyst’s analysis, this might not significantly lower
Bitcoin’s price. Instead, market speculators should be more
worried about the PUNL of mid-term holders (those who have been
holding Bitcoin for 3 to 6 months). The PUNL also turning negative
will “suggest widespread pessimism or negative sentiment.” This
could lead to massive selling pressure on Bitcoin’s price as this
category of investors might also offload their holdings out of
fear. The Worst May Already Be Over Crypto analyst Ali
Martinez had previously shared a similar analysis to Onchained’s,
noting that Bitcoin short-term holder’s (STH) realized price was at
$59,800. The analyst warned back then that Bitcoin dropping below
this level could trigger “notable Bitcoin price corrections.”
Following his prediction, Bitcoin fell below $59,800, dropping to
as low as $57,000. Related Reading: Crypto Analyst Says
Ethereum Price Will Drop To $2,500, Here’s Why However, the
flagship crypto has since then recovered nicely above $60,000.
Although Bitcoin is still showing signs of a bearish outlook, its
quick recovery above $60,000 suggests that the worst might be over,
and all the crypto token needs right now is a catalyst to spark a
continuation of its bull run. Arthur Hayes, BitMEX’s
co-founder and former CEO, also confirmed this belief, noting that
Bitcoin has already found its local bottom. However, he predicted
that Bitcoin will likely have a “range-bound price action between
$60,000 and $70,000 until August.” BTC bulls push price above
$63,000 | Source: BTCUSD on Tradingview.com Featured image from
Kiplinger, chart from Tradingview.com
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