Since the general market crash caused by the Japan Stock Market downswing, Bitcoin, the largest cryptocurrency asset has been consistently experiencing significant price swings, triggering speculations about a huge price drop as several key metrics turned bearish, pointing to a possible extended decline.
Bitcoin Could See Bearish Movement To $40,000
As Bitcoin continues to demonstrate bearish momentum, Grizzly, a technical and on-chain analyst, navigating Bitcoin’s recent price action has issued a cautionary prediction, stating that BTC could fall further to about $40,000. The market expert’s wearisome forecast for the crypto asset is based on the crucial NUPL (Net Unrealized Profit/Loss) metric.
It is worth noting that the NUPL metric is a tool for determining the distinctiveness between relative unrealized profit and relative unrealized loss. Simply put, the tool here illustrates the mood of investors and what Bitcoin owners who desire to sell their holdings would make or lose.
When the NUPL is high, it suggests that a sizable section of the market is profiting, which may lead to pressure to sell or take profits. On the other hand, when the NUPL is low, it means that the majority of market participants are losing money, thereby encouraging additional buying or a bullish mood.
According to the analyst, the NUPL metric’s current readings are entering a range that usually marks the beginning of a price drop for Bitcoin, as it is presently positioned close to a critical level of 0.4, indicating a probable downward trajectory.
The 0.4 level has historically been a major support and resistance level, and according to data, a break below this mark frequently signals the start of a huge bearish trend. Should the index continue its downward trend, Grizzly is confident that the bears may seize complete control of the market.
As a result, the expert anticipates a strong decline for BTC to about $40,000 in the short term. While the analyst expects a price drop due to the NUPL metric, he has pointed out that the magnitude of the present downswing is not yet strong enough to signal the end of the upward trend conclusively.
BTC Experiences Slight Rebound
Given the volatile nature of Bitcoin, Grizzly’s analysis acts as a warning to crypto investors about a potential price instability for the crypto asset in the near future.
Currently, the digital asset is displaying a healthy movement, after witnessing a slight recovery at the $56,632 level. BTC may have rebounded to $58,531, but in the past week, the flagship coin is still down by more than 3%.
Even though the general market sentiment is bearish, there is still room for the asset to attract further gains, as its daily trading volume has surged by over 6%, suggesting optimism among investors.
Featured image from LinkedIn, chart from Tradingview.com