Bitcoin and usage are two words that often go hand in hand. Willpower means that the price of an asset can change quickly and unpredictably, especially for the worse.
For Bitcoin, after the highs of the last two years, the last few months have been difficult. But for a trader, on-chain metrics can help navigate the cryptocurrency winter.
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Despite our presence, Bitcoin broke out of the $17,000-$24,000 trading channel at press time, trading at $25,000 on CoinMarketCap.
Undeniably, BTC has fallen by 16% since the beginning of the year.
However, according to a CryptoQuant analyst, the cycles in crypto have become less clear-cut over time as profit highs and loss lows did not quite follow a horizontal line. The mentioned analyst used the on-chain net unrealized profit and loss (NUPL) metric as a benchmark to shed more light.
Here the value of the metric jumped and became positive. The chart shows the corresponding trend areas for the Bitcoin NUPL indicator.
As you can see, these NUPL cycles have become less volatile over time as the metric has not gone over the 0.75 greed mark as it did in previous cycles.
The last two funds also had to reduce the amount of losses. Some time ago, the NUPL value fell sharply to negative values, and then recovered to positive values after the formation of a potential trough.
However, this fall was far from the conditional mark of 0.4.
Moreover, the risk of a sharp downturn (unlike in the past) appears to have lessened as macroeconomic pressures eased. Analyst firm Glassnode shared the same story in a tweet.
However, “Bitcoin demand continues to fall as altcoins steal the thunder,” Glassnode added. But that doesn’t mean prices can’t rise above the coastline.
Looking at the weighted average funding rate, it is safe to say that short-term holders have overloaded the network and a rebound is possible.