The cryptocurrency market remained subdued amidst short-term nerves, mixed signals, and no clear direction. Bitcoin also showed limited conviction and was visibly under pressure after shedding over 1% of its value in the last 24 hours.
Data shows BTC’s strongest rallies start only after long-term investors absorb unrealized losses and selling pressure fully exhausts itself.
Bitcoin Bulls Await
Joao Wedson, co-founder of Alphractal, said Bitcoin’s next major bull cycle has historically begun only after long-term holders move into unrealized losses. According to Wedson, the Net Unrealized Profit/Loss (NUPL) metric for long-term holders, which tracks the average unrealized gains or losses of the most resilient market participants, currently stands at 0.36. Such a trend indicates that these investors remain in profit.
However, Wedson explained that the important signal appears when this metric turns negative. A negative NUPL means even long-term holders are underwater, a condition that has consistently coincided with periods of extreme market pessimism.
In past cycles, such phases pointed to seller exhaustion and a redistribution of coins toward stronger hands. Wedson noted that this environment has historically represented the final stage of bear markets and preceded the start of a new bull run, which means that major opportunities tend to emerge during periods of market depression rather than at cycle highs.
Low MVRV
Similar conditions are now being flagged by Bitcoin’s valuation indicators. CryptoQuant, for one, found that Bitcoin’s Market Value to Realized Value (MVRV) ratio has entered its “Accumulation Zone” for the first time in four years, a move last seen in May 2022.
According to the analytics firm, the previous instance of MVRV falling into this range was followed by a sharp price correction, as Bitcoin declined roughly 50% from around $30,000 to $15,000. CryptoQuant explained that the Accumulation Zone is defined by MVRV remaining below 1.44 and potentially falling as low as 0.90, levels that historically indicate periods when the crypto asset is undervalued relative to its realized price.
These conditions typically coincide with high market pessimism and reduced speculative activity. The firm also added that, based on historical patterns, continued periods with MVRV below 1.44 have offered favorable phases for long-term accumulation, even as price volatility and downside risk remain quite high in the short term.
The post Bitcoin’s Next Bull Run Depends on This Single On-Chain Indicator appeared first on CryptoPotato.
