- Despite recent price problems, the BTC market remained euphoric.
- Readings from the coin’s MVRV ratio and Realized Loss metrics suggested that a local bottom could be discovered soon.
Bitcoins [BTC] The Net Unrealized Profit & Loss (NUPL) metric has shown that the coin market remains in the euphoria phase with significant unrealized gains among investors, Glassnode found in a new report.
The BTC market is said to be euphoric when there is widespread optimism and belief that the price of the coin will continue to rise indefinitely.
During this period, the market witnesses rapid price growth and increased trading activity fueled by the excitement.
According to Glassnode, the value of the coin’s NUPL above 0.5 showed that while this phase has cooled since the start of the market correction, euphoric elements within the BTC market remained.
Santiment said:
“By this measure, the euphoria phase (NUPL>0.5) of this bull market has been in effect for the past seven months. However, even the strongest uptrends experience corrections, and these events provide valuable information about investor positioning and sentiment.”
Has the local bottom been reached?
According to Glassnode, BTC’s recent price correction has caused short-term holders (STHs), especially those who have held onto their coins for a period between a week and a month, to intensify distribution.
Their distribution activity during periods of market correction such as this becomes notable as it can help identify potential buying opportunities (local lows).
Glassnode assessed the historical pattern of the MVRV ratio of coins held between one week and one month and found that during bull market corrections like this, the value of the ratio “falls within the range of 0.9-1.”
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This means that investors who have held their coins for a period between a week and a month typically witness a decline in their assets of around 0% to 10%, causing them to be sold.
Source: Glassnode
The on-chain data provider also took into account the realized loss of entities from one week to one month old.
Historical precedents show that when this measure rises above 1, it indicates that STHs are panic selling at a loss.
Source: Glassnode
Glassnode combined the measurements of both metrics and concluded:
“Since the price is in the range of $60,000 to $66,700, the MVRV condition is met, and it could be argued that the market is working out a local bottom formation. That said, a sustained break below that MVRV level could trigger a cascade of panic and force a new equilibrium.”