Bitcoin bottom signal may need a deeper price reset, CryptoQuant says

Bitcoin may not have finished its bear-market reset if a closely watched onchain profitability gauge follows its old pattern, according to CryptoQuant. For retail investors, the takeaway is straightforward: one historical bottom signal still has not reached the stress levels seen at earlier major Bitcoin lows.

Cointelegraph market data showed Bitcoin at $63,446.17, up 0.99%. CryptoQuant’s analysis said Bitcoin could still need new cycle lows, meaning the lowest price of the current broad market phase, for the Net Unrealized Profit/Loss metric to line up with past bear-market endings.

Net Unrealized Profit/Loss, or NUPL, compares the price at which Bitcoin last moved with its current price. In plain English, it estimates whether the overall Bitcoin supply is sitting on paper gains or paper losses. A positive reading means holders are, in aggregate, still in profit. A negative reading means the market is, on net, underwater.

CryptoQuant contributor TheChessOnChain said NUPL becomes one of Bitcoin’s “cleanest cycle clocks” when smoothed through 30-day and 100-day exponential moving averages. An exponential moving average, or EMA, is a trend line that gives more weight to recent data, making noisy market data easier to read without treating every daily move equally.

CryptoQuant put the current NUPL score at 0.158, a level it said was last seen in early 2023. The platform said the 100-day EMA of NUPL was still above zero, while past Bitcoin bear-market bottoms occurred after that smoothed measure fell below the zero line.

Why the zero line matters

TheChessOnChain pointed to four prior periods when the 100-day EMA of NUPL dropped below zero and Bitcoin was forming a cycle low: late 2011, near $2; January 2015, at $182; December 2018, at $3,206; and November 2022, during the FTX-driven bottom at $15,792.

CryptoQuant said Bitcoin priced just above $60,000 corresponded to a 100-day NUPL EMA of 0.215. That leaves room between current conditions and the negative readings associated with earlier bear-market lows. Cointelegraph’s analysis framed that gap as a setup in which Bitcoin could fall below $58,000 if the metric repeats its historical pattern.

CryptoQuant did not present the pattern as a guarantee. The platform said NUPL has made higher lows over Bitcoin’s history, which leaves open the possibility that this cycle bottoms without the 100-day EMA crossing below zero.

The firm described two possible paths: the metric either falls below zero as it did around previous cycle bottoms, or the current cycle becomes the first to bottom while the metric stays positive. CryptoQuant called the zero line the level to watch in the coming weeks, but did not give a date for a potential bottom.

Other signals remain mixed

Cointelegraph said several onchain indicators have recently resembled signals seen around the 2022 bear-market reversal. Even so, it reported that market participants broadly still expect fresh macro lows before buyers regain control.

CryptoQuant contributor Axel Adler Jr. separately highlighted mixed supply data last week. Adler said the share of Bitcoin supply held at a loss may still be about two months away from levels that have historically matched the end of bear markets.

“Until then, it is more accurate to treat capitulation as a process rather than a completed fact,” Adler wrote. Capitulation refers to a stage when investors sell after a long decline, often near the end of a bear market, though it can only be identified with confidence after the fact.

This story draws on original reporting from Cointelegraph.