On-chain data shows that the Bitcoin NUL indicator remains below 0.5, indicating that more downside may be in store for the cryptocurrency before bottoming.
Bitcoin’s Net Unrealized Loss Increases, But Still Below 0.5
As pointed out by an analyst at CryptoQuant MailThe price of the cryptocurrency may still be anywhere near the bottom.
The relevant pointer here is “net unrealized loss(or NUL for short), which tells us the total number of coins that are currently carrying an unrealized loss.
The metric works by comparing the last selling price of each coin in the chain to the current value of bitcoin. If the previous coin of any coin is more than the current coin, then that coin is taking a loss at the moment.
On the other hand, the current price in excess of the last sale value means that the currency is making a profit at the moment.
Related reading | Bitcoin drops below $30K as 10,000 BTC flows into Gemini
The NUL scale takes into account only the previous type of coin. Another indicator, net unrealized profit (NUP), measures the latter category.
Now, here’s a chart showing the trend in Bitcoin NUL over the currency’s history:
The value of the indicator seems to have been rising recently | Source: CryptoQuant
In the above chart, Quantum defines two different Bitcoin NUL regions, where a metric value of 0.5 lines is the dividing line between them.
Historically, the cryptocurrency price tends to notice major bottoms when the index value is greater than 0.5
As you can see in the chart, the NUL scale has noticed some upside in recent months. This is due to the depreciation of Bitcoin during this period, which led to more coins underwater.
However, despite this recent rally, it appears that the net present value of the unrealized loss is still well below the 0.5 level.
If the past trend is anything to go by, Bitcoin may notice more downside in the upcoming future before the NUL value crosses the threshold and lower I have been.
At the time of writing this report, Bitcoin price It is floating around $29.7K, up 3% in the past seven days. Over the past month, the cryptocurrency has lost 23% of its value.
The chart below shows the currency price trend over the past five days.
Looks like the value of the crypto has gone down over the last couple of days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com