A number of on-chain metrics reported corrections when Bitcoin dropped on the charts last week. In reality, BTC fell to as low as $43,000 for a short period, with major reshuffling seen after Futures Open Interest plummeted by $4 billion.
Other indicators, such as the Bitcoin financing rate, also witnessed a reset, with Grayscale’s premium recording a low of-3.77 per cent. AMBCrypto has recently announced a promising reboot for the ASOPR, in which it was identified that bad hands had been washed out.
However, one particular metric carrying historical importance did not correct much. Interestingly, it could possibly alter the course of the rally going forward.
Bitcoin NUPL continues to avoid 0.5 reset
According to Glassnode’s latest report, the strength of the current Bitcoin rally can be shown by BTC’s Net Unrealized Profit and Loss or NUPL. In the past, the NUPL has frequently retested the 0.5 mark during stock market crashes. While a 0.5 re-test has been seen several times during both the 2013 and 2017 rally seasons, the same has yet to be found in the current market.
Here, it’s worth remembering that market conditions have certainly improved over the years in terms of customer viability and hodling sentiment, with sales pressure not fuelling major outflows for Bitcoin.
Further, data from CryptoQuant appeared to indicate that bitcoin outflows from exchanges tended to hold their low levels throughout the week, with long-term hodlers unfazed by a 21 percent decrease in cryptocurrency rates.
The persistence displayed by investors came to fruition at press time as Bitcoin had managed to build a foothold above its immediate resistance of $47,400 over the last 24 hours.
While it’s still a little early to expect the launch of a new bullish leg for Bitcoin, according to Willy Woo, over $45,000 convergence is a good indication of stabilisation.
If history repeats itself, does NUPL reset carry a damaging outcome?
Although the NUPL did not record a 0.5 reset during this rally, it has traditionally occurred during any bull cycle. According to info, the realised price trading is currently $14,511, and if the NUPL fell to 0.5, it will mean that Bitcoin would drop to $21,766 on the floor.
That would mean a 55.76 percent decrease from BTC’s press time position, a drop that would totally strip away all of BTC’s gains from 15 December 2020.
Although historical odds are worth noting, it is also important to consider the macro-difference between the previous rally and the new one, with Bitcoin at the receiving end of more adoption than ever before.
For instance, the average weekly investment into Grayscale’s Bitcoin Trust during Q4 of 2018 was $2 million. The average investment in GBTC for Q4 of 2020 was $217.1 million. Needless to say, the course of history for Bitcoin is indeed changing.
402 Interactions, 4 today