Bitcoin [BTC]: Indicators Point to a Bullish Cycle and On-Chain Data Reveals…

• BTC’s NUPL suggests that the coin has started a new bull cycle.
• However, the increasing coin dump suggests a lack of investor confidence.

In a new one reportCryptoQuant analyst Sachi noted that Bitcoin’s valuation [BTC] Net unrealized gain/loss (NUPL) showed that the leading coin has started a new bull cycle.

The NUPL is a metric used to evaluate the BTC market’s profit margin relative to its market cap. A value below zero indicates an accumulation phase, while values ​​above 0.5 indicate a distribution phase.

According to Sachi, “the critical threshold for monitoring is 0.2.” In the current market, BTC’s NUPL has achieved this “crucial” position.

The analyst’s review of BTC’s historical performance found that a golden cross, which typically occurs between the 128-day and 200-day moving averages, signals the end of the accumulation phase when the NUPL metric hits or exceeds 0.2. This signifies the beginning of a bull market.

Sachi concluded that a bull cycle was underway as all three critical factors were again present in the current cycle.

Source: CryptoQuant

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Accumulation has slowed, but only because…

For the first time since the unexpected fallout of cryptocurrency exchange FTX, BTC temporarily traded above the $25,000 price level on Feb. 16.

Although the king coin’s price later traded below $25,000 for a few weeks, investors assumed that BTC would recapture the price position, prompting them to open multiple long positions.

However, things did not go as expected, leading to fading belief in another price rally. Investor confidence fell further on March 3, when the price of BTC suddenly fell 5%, dropping from $23,500 to $22,240 on a sense of uncertainty and doubt Silvergate Capital.

Tits led to the liquidation of previously opened long positions.

While Sachi opined that the drop in accumulation and other factors were starting a new bull cycle, a look at the on-chain data and price chart showed otherwise.

First, BTC open interest has been in a downtrend since February 21st. The decline in open interest coincides with a 10 percent drop in asset value.

When a crypto asset’s open interest decreases, it means that the number of outstanding contracts or positions in the market has decreased.

It is often accompanied by a drop in market sentiment or a decrease in the number of traders willing to take positions in the market. This is expected to lower the value of an asset.

Source: coin jar

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Additionally, on a daily chart, increased coin allocation has brought buyers to the mercy of sellers. Key momentum indicators such as the RSI and MFI were positioned in downtrends and remained below their respective neutral regions.

Likewise, the coin’s Chaikin Money Flow (CMF) was giving a negative reading of -0.09 at press time, indicating the severity of the coin distribution. Without a change in conviction, this is usually preceded by another price decline.

Source: BTC/USDT on TradingView

Finally, a look at BTC’s funding rates on exchanges confirmed the lack of confidence permeating the market at press time. As of this writing, according to data from CryptoQuant, short positions have exceeded long positions. It was the highest negative funding rate since the beginning of the year.

Source: CryptoQuant

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