U.S. President Donald Trump’s tariff announcement on October 10 sent shock waves throughout the cryptocurrency market, with the price of Bitcoin (BTC) plummeting to around $102,000 for the first time since August. The crash, which resulted in a loss of approximately $800 billion in market value and the elimination of $19.2 billion in positions, marked one of the largest liquidations in market history.
However, as the market appears to have found some stability around the $111,000 price range, recent on-chain data has surfaced, painting a pessimistic picture of the asset’s near-term future.
Analyst says market reset is not yet complete
In a QuickTake post on the CryptoQuant platform, a crypto educational institution called XWIN Research Japan gave reasons to believe that the Bitcoin market has not yet seen a bottom.
The XWIN study began with an interesting comparison to previous years, when BTC experienced a psychological reset. According to these market experts, the difference between Bitcoin’s past resets and the current market crash became apparent after studying the Bitcoin Net Unrealized Profit/Loss (NUPL) indicator.
For context, the Bitcoin NUPL indicator tracks the overall profitability of BTC holders. This is done by calculating the difference between unrealized profits and losses. When Bitcoin hit its lowest point in March 2020, the NUPL level fell below zero. The same will apply in November 2022.
It is clear that investors were holding BTC at a net loss during this period. Interestingly, this period of market capitulation marked the beginning of a powerful bull cycle following months of despair. What’s notable about the current crash is that Bitcoin’s NUPL is still close to 0.5, showing that a significant number of Bitcoin holders are still taking profits.
BTC Calm Could Point to an Imminent Storm
To uncover the background mechanisms behind Bitcoin’s slowdown in momentum,
As expected, overly leveraged long positions were wiped out in the previous market sell-off, but that wasn’t the only thing that happened. According to the cryptocurrency research institute, open interest also fell along with the BTC price, helping to normalize derivatives indicators.
Although the initial selloff wiped out leverage during the 2018-2019 and 2022 market crashes, the actual market bottom came several months after the market was de-leveraged during a period dominated by panic and losses. Based on this historical data, the current setup seems to suggest that the market is in a pre-capitulation phase and stability is too fragile to rely on.
For now, sentiment among investors remains the same. However, if the market becomes more fearful and the cryptocurrency’s NUPL falls to levels close to zero, a new, sustainable rally could begin.
At press time, Bitcoin was worth about $111,110, reflecting no significant growth over the 24-hour period.
Featured image from Pexels, chart from Tradingview.com
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