On-chain data analysis reveals that two key indicators within the Bitcoin market are currently revisiting levels that have historically held significance in influencing its trajectory.
Bitcoin Net Unrealized Profit/Loss (NUPL) Indicators Show Neutral Stance for Short-Term & Mid-Term Holders
Highlighted in a recent post by a CryptoQuant analyst, the BTC NUPL indicators are undergoing a reevaluation of crucial levels. The “Net Unrealized Profit/Loss” (NUPL) is a metric designed to monitor the overall net profit or loss held by current investors.
The mechanism of this indicator involves examining the historical on-chain activity of each circulating coin to determine the price at which it was last transacted. If the previous transaction price for any coin is lower than Bitcoin’s current spot price, it signifies that the coin is currently holding a profit.
The NUPL categorizes this profit as unrealized profit, and similarly, any losses held by underwater coins are classified as unrealized losses. The metric then calculates the disparity between these two figures to establish the net profit/loss status of the entire market.
For the purpose of this analysis, the entire market isn’t the sole focus; specific segments within it are more pertinent. In particular, attention is directed towards two groups of Bitcoin holders referred to as “short-term holders” (STHs) and “mid-term holders” (MTHs).
STHs encompass all investors who acquired their Bitcoin holdings within the past six months, while MTHs are those who have held their Bitcoin for at least six months up to two years.
Below is a chart illustrating the trend of the Bitcoin NUPL specifically for STHs:
 Caption: The chart depicts the Bitcoin STH NUPL trend.
As evident from the chart above, the Bitcoin STH NUPL has maintained a positive stance throughout the ongoing rally that initiated in January of the current year. This positive correlation is often observed during bullish trends, given that STHs are relatively recent investors; hence, any surges in price promptly affect their profit/loss status.
However, of greater significance is the indicator’s proximity to the zero mark. At this point, STHs, as a collective, exhibit a neutral position, indicating that their unrealized losses are balanced by their unrealized profits.
Traditionally, during bullish trends, whenever the metric revisits this threshold from above, it garners support and imparts a bullish influence on the price. This phenomenon is observable within the current rally itself, as demonstrated by the rebounds in March and June, both of which coincided with the STH NUPL nearing this mark.
The chart further reveals that the metric has recently approached this line once again. This retracement could prove pivotal, as a dip below might signal a shift towards a bearish sentiment.
In the subsequent graph, it is apparent that the MTH NUPL is also revisiting the same threshold, albeit from the negative zone:
 Caption: The chart illustrates the Bitcoin MTH NUPL trend.
Until recently, MTHs had been grappling with losses; however, they are currently on the brink of transitioning back into profit territory. A breakthrough of this level by the metric would signify a positive indication for the rally. Historical trends indicate that the bullish momentum tends to persist whenever these investors resurface from underwater positions.
Nevertheless, it’s important to acknowledge the possibility of the break-even line acting as resistance for Bitcoin. Should this occur, the asset could experience a bearish effect. The unfolding days will provide clarity on the outcomes of both the STH NUPL and MTH NUPL retracements.
BTC Price Update
At the time of writing, Bitcoin is trading at approximately $29,000, representing a 1% decrease over the past week.
