Bitcoin according to indicator at the start of possible bull market

Last week we wrote based on on-chain data from Glassnode that long-term investing in bitcoin (BTC) has never been more popular than it is now. New dates confirms the sentiment, thinks Glassnode. The analysis agency has even devised a new indicator for it.

New indicator shows bitcoin equilibrium

The company writes that in zhis weekly research report, this time titled ‘Seeking Equilibrium‘. The new indicator is called Net Unrealized Profit/Loss (NUPL) and measure to what extent coins are in the plus or minus as long as they are not sold. Until now, it only measured coins that have already been sold.

Currently its value is 0.26. That is the phase of equilibrium, which means that holders make no net profit, but also no loss. If the value is coming out of equilibrium, it could indicate a decline and after a deeper correction to a bottom. On the other hand, an increase is also possible, which usually indicates a top in the market.

The indicator can trade in the yellow zone for a long time. In the 2016-2017 bull market, the indicator was yellow for 16 and a half months. In 2019-2020 it was 17 and a half months. At the moment, the indicator has only been yellow for 2 months.

Glassnode’s NUPL indicator – Source: Glassnode.

However, it can take quite a while before this top is found. For example, the value for bitcoin in 2017 was already green in January, while the top only came in December. In that time, the bitcoin price has risen 30 times. The same goes for the other side. In 2018, the value was already yellow just after the top, but then the price fell by more than 60% against the dollar. Glassnode currently thinks we are headed for the green zone.

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Bitcoin HODLers do sell

This is evident from the indicator Long Term Holder Spending & Profitability that the wallets that have been HODLing for 155 days and longer have sold more than before. That can be positive. In a healthy market, some investors occasionally sell their coins, which are then bought up by other investors, it stated last week.

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