Bitcoin ZERO Suggests More Downside Coming Before Bottom
On-chain data shows that the Bitcoin ZERO indicator is still below a reading of 0.5, a sign that more downtrend is in store for the crypto before hitting the bottom.
Bitcoin Net Unrealized Loss Rises, But Still Stays Below 0.5
As noted by an analyst in a CryptoQuant afterthe price of the cryptocurrency may not be close to a bottom yet.
The relevant indicator here is the “net unrealized loss” (or ZERO for short), which tells us about the total number of coins that currently have an unrealized loss.
The metric works by comparing the last selling price of each coin in the chain to the current value of Bitcoin. If the previous previous of a coin was more than the current one, then that coin is now at a loss.
On the other hand, the fact that the current price is higher than the last sale value would imply that the coin is currently making a profit.
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The ZERO metric only considers the former type of coins. Another indicator, net unrealized profit (NUP), measures this last category.
Here is a chart showing the trend in the Bitcoin ZERO over the history of the coin:
The value of the indicator seems to have increased recently | Source: CryptoQuant
In the chart above, the quant has marked the two different zones of the Bitcoin ZERO, with the metric equal to 0.5 line being the dividing line between them.
It seems that historically, the price of the crypto tended to observe the main bottoms when the value of the indicator was above 0.5
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As you can see from the chart, the ZERO statistic has observed an upward trend in recent months. This is because the value of Bitcoin has fallen during this period, causing more coins to go under water.
Despite this recent increase, it appears that the present value of the net unrealized loss is still well below the 0.5 level.
If the past trend is anything to join, Bitcoin may see a further downward trend in the coming future before the value of the ZERO crosses the threshold and a bottom is formed.
At the time of writing, Bitcoin’s price is hovering around $29.7k, up 3% over the past seven days. In the past month, the crypto lost 23% in value.
The chart below shows the trend in the price of the coin over the past five days.
It seems that the value of the crypto has fallen in recent days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, Charts from TradingView.com, CryptoQuant.com