The Bitcoin market is once again in focus: the key on-chain indicator NUPL (Net Unrealized Profit/Loss) is approaching critical levels that in past cycles signaled an approaching market bottom. If the historical pattern holds, the price of the first cryptocurrency could drop below the $58,000 mark. This forecast was made by an analyst under the pseudonym TheChessOnChain, whose research I closely follow.
Historical Pattern: Four Bottoms, One Signal
The NUPL metric, smoothed by a 100-day exponential moving average (EMA), has historically coincided with the end of bearish phases. TheChessOnChain provides specific examples: late 2011 (around $2), January 2015 ($182), December 2018 ($3,206), and November 2022 amid the FTX collapse ($15,792). In all these cases, the indicator crossed the zero mark, preceding a trend reversal.
Currently, the NUPL indicator is around 0.215 and continues to decline with the Bitcoin price at ~$63,000. This leaves significant room for further decline. The expert emphasizes that this is about a historical pattern, not a rigid scenario. He allows for two possibilities: either the indicator will cross the zero line again, or the current cycle will be the first where a bottom forms without such a signal. "The zero line is a level to watch in the coming weeks," TheChessOnChain concludes.
Current Market Situation: Correction and Weak Demand
After nearly a week of growth, Bitcoin has turned to a decline. The price has pulled back to $63,000 after rising to a two-week high of around $64,500. However, derivatives market data does not confirm the sustainability of the upward movement. Open interest in Bitcoin futures has decreased from 776,000 BTC on July 3 to the current 740,000 BTC, indicating a reduction in trader activity.
Weak demand in the spot market also casts doubt on the sustainability of the growth. This is indicated by two key factors: first, more than $4 billion was withdrawn from spot Bitcoin ETFs in June, according to SoSoValue. Second, the Coinbase Premium index, which reflects the activity of U.S. investors, continues to remain in negative territory, according to CoinGlass.
My professional commentary: The NUPL signal is powerful, but not the only indicator. The decline in open interest and outflows from ETFs point to caution among institutions, which increases risks. However, the historical trend toward "shallower bottoms" in each cycle could make the current correction less severe than expected. The market is in a zone of uncertainty, and the coming weeks will be decisive in determining the direction.