Bitcoin’s next bull run depends on this single on-chain indicator

This on-chain metric turning negative has repeatedly led to seller exhaustion and the transition from bear markets to bull cycles.

The cryptocurrency market remained subdued amid short-term nerves, mixed signals and no clear direction. Bitcoin also showed limited conviction and was visibly under pressure after losing more than 1% of its value in the past 24 hours.

Data shows that BTC’s strongest rallies only begin after long-term investors have absorbed unrealized losses and selling pressure has been completely exhausted.

Bitcoin bulls await

Joao Wedson, co-founder of Alpharactal, said Bitcoin’s next major bull cycle has historically only begun after long-term holders suffer unrealized losses. According to Wedson, the net unrealized gain/loss (NUPL) measure for long-term holders, which tracks the average unrealized gains or losses of the most resilient market participants, is currently 0.36. Such a trend indicates that these investors continue to make profits.

However, Wedson explained that the important signal appears when this measure becomes negative. A negative NUPL means that even long-term holders are underwater, a situation that has consistently coincided with periods of extreme market pessimism.

In previous cycles, such phases indicated seller exhaustion and a redistribution of coins to stronger hands. Wedson noted that this environment historically represents the final stages of bear markets and precedes the start of a new bull run, meaning big opportunities are more likely to occur during periods of market depression than during cycle highs.

Low MVRV

Similar circumstances are now being highlighted by Bitcoin’s valuation indicators. CryptoQuant, for example, found that Bitcoin’s market value to realized value ratio (MVRV) 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 example of MVRV falling within this range was followed by a sharp price correction as Bitcoin fell by around 50% from around $30,000 to $15,000. CryptoQuant explained that the accumulation zone is defined by the MVRV remaining below 1.44 and possibly falling to 0.90, levels that historically indicate periods when the crypto asset is undervalued relative to its realized price.

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These conditions generally coincide with high market pessimism and reduced speculative activity. The company also added that, based on historical patterns, sustained periods of MVRV below 1.44 have provided favorable phases for long-term accumulation, even as near-term price volatility and downside risk remain quite high.