Key Points
- Bitcoin has faced a 14% loss in the past six days, with the NUPL metric indicating a possible end to the current uptrend.
- Despite a potential deeper correction, signs of accumulation are evident as Bitcoin continues to leave exchanges.
Bitcoin has experienced a significant 14% drop within the last six days, raising concerns among investors.
Bitcoin’s Current Uptrend May Be Ending
Bitcoin’s 7.2% loss recorded in just ten hours has sparked speculation that the current uptrend could be nearing its end. The $64.8k support region was unable to stop the bearish advance.
An analyst from CryptoQuant’s Insights page has pointed to the Net Unrealized Profit/Loss (NUPL) metric as a potential indicator of this trend. The NUPL is a tool used to identify when investors are profiting, calculated using the realized cap of Bitcoin.
The analyst pointed out that the NUPL metric rarely stays above the 0.6 mark for an extended period. A +0.6 reading is often followed by a sharp price correction. However, this trend can be bucked during bull runs.
NUPL and Bitcoin’s Price
From December 2020 to April 2021, the NUPL remained consistently above +0.6 as Bitcoin rallied from $19k to $60k. However, since March 16th, the NUPL has dropped below +0.6, with the price standing at $63k at the time of writing.
The short-term outlook suggests a deeper correction toward $58k. Despite this, Bitcoin continues to leave exchanges, indicating signs of accumulation.
The BTC netflow chart reveals more Bitcoin leaving centralized exchanges than entering, even as prices began to pull back from the $73k mark.
The spent output age bands saw a large spike in the spent output of holders whose Bitcoin were aged just 1-3 months on March 13th. This suggests that short-term holders were booking profits.
However, longer-term holders, whose coin age was a year or longer, did not sell their assets as prices fell below the $70k level, demonstrating faith in Bitcoin.
While the behavior of long-term holders is not a perfect guide to Bitcoin’s trends, it is noteworthy that they sometimes panic and sell en masse even when Bitcoin hits a long-term low.
A recent report explored how the current retracement could play out in the next 4-6 weeks. The Bitcoin halving cycle seems to be repeating itself, but long-term investors are advised not to worry about short-term price volatility.
