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Is the Onchain Analysis Saying We’ve Reached the End of the Bull Run? In the world of cryptocurrencies, the recent price increase of Bitcoin is far from surprising. However, amidst this excitement, there are apparent indicators pointing to a potential change in market sentiment – a situation closely watched by experienced investors.
The indicator that has recently caught attention is called Net Unrealized Profit and Loss (NUPL). The recent uptrend and the rapid rise of Bitcoin seems to portray a picture of a market in an overheating trend. As NUPL approaches the 0.6 level, it has historically been a harbinger of significant price corrections. The accompanying screenshot vividly shows that a downturn towards the next period usually occurs before NUPL stays above the level of 0.6 for a long time.
Currently, we have been in the “overbought” zone for almost three weeks. Past cycles have shown that this stage usually lasts between 3 to 6 weeks and occurs after a significant price correction. Given that we are before halving, there is a possibility that the upcoming correction isn’t too far away – possibly till the end of March.
A significant correction in Bitcoin’s price will lead to a cool down in NUPL. Once it drops below the 0.3 threshold, it could present a strategic opportunity for investors to reenter the market and accumulate more Bitcoin.
In summary, while the bull market still has a bit of power, it would be prudent to consider taking profits and being cautious among these potential exhaustion signs. As always, being knowledgeable and mindful is extremely important in navigating the turbulent waters of cryptocurrency investments.
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