The Net Unrealized Profit/Loss (NUPL) metric, smoothed by a 100-day exponential moving average (EMA), has closely approached critical levels that in past market cycles preceded the formation of a bottom. If the historical pattern holds, the price of Bitcoin could fall below the $58,000 mark.
Data analysis shows that the crossing of the 100-day EMA of NUPL below zero has consistently coincided with the end of bearish phases: in late 2011 (~$2), in January 2015 ($182), in December 2018 ($3,206), and in November 2022 amid the FTX collapse ($15,792). The current indicator value is around 0.215 and continues to decline with the Bitcoin price at ~$63,000. This leaves significant room for further downward movement.
It is important to emphasize: this refers to a historical pattern, not a rigid forecast. The current cycle could be the first where a bottom forms without crossing the zero mark, which fits the trend of gradually smoothing cycle amplitudes. The key level to watch in the coming weeks is the indicator's zero line.
Market Context: Correction and Weakening Demand
After nearly a week of growth, Bitcoin has turned to a decline, retreating to $63,000 from a two-week high of around $64,500. Derivatives market data does not confirm the sustainability of the upward movement: open interest in BTC futures has decreased from 776,000 BTC on July 3 to 740,000 BTC, indicating a decline in trader activity.
Weak demand in the spot market further casts doubt on the sustainability of the growth. More than $4 billion was withdrawn from spot Bitcoin ETFs in June, and the Coinbase Premium index, reflecting the activity of American investors, continues to remain in negative territory. Earlier, analysts also noted that Bitcoin's Sharpe ratio has approached values typical of the final phases of bear markets.
My comment: The coincidence of NUPL signals with weakening demand and declining open interest forms a classic picture for a continued correction. However, it is worth considering that the cryptocurrency market is becoming increasingly institutionalized, and historical patterns may lose their strength. I assess the probability of testing the $58,000 level in the coming weeks as high, but not fatal — this could become an entry point for long-term investors.