Bitcoin’s Bull Market Timing: Insights from a Key Chart
In the quest to pinpoint the next major Bitcoin bull market, investors and analysts constantly seek out reliable indicators. Amidst the swirl of price predictions, macroeconomic narratives, and ETF flows, a chart published by Alphractal founder and CEO Joao Wedson on February 16, 2025, offers fresh insights. This chart, which focuses on the profit positioning of long-term Bitcoin holders, sheds light on historical patterns that could signal the onset of the next bull phase.
Understanding the Bitcoin Chart: Importance and Insights
Wedson’s chart employs the Long-Term Holder Net Unrealized Profit/Loss (NUPL) metric to provide a comprehensive view of Bitcoin’s trajectory. This indicator calculates the average unrealized gains or losses for investors regarded as long-term holders, entities characterized by their robust holding patterns and minimal selling activities.
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Unlike metrics that spotlight short-term market gyrations, Wedson’s approach offers a glimpse into the financial health of Bitcoin’s most steadfast market participants. The current reading, at 0.36, indicates that long-term holders, on average, remain in profit, suggesting their holdings surpass acquisition costs.
The chart uses a color-coded system to depict these trends, with green zones indicating periods when long-term holders enjoy unrealized profits. Historically, these green phases have aligned with either the latter stages of bull markets or transitional consolidation periods. The persistence of these green regions, as highlighted by Wedson, suggests that the market has not yet experienced the deep stress typical of significant downturns. Conversely, the most critical signals arise when the metric dips below zero.
Implications of a Negative Metric
Wedson’s analysis underscores the significance of moments when the Long-Term Holder NUPL turns negative. During these periods, even the most patient investors incur unrealized losses, and the chart marks these intervals in red, setting them apart from profit-dominant phases.
Historically, these red zones have coincided with the tail end of bear markets, characterized by pervasive pessimism and compressed valuations. Wedson refers to this stage as one of maximum market depression, where financial strain affects not just speculative traders but also long-term capital.
The chart’s historical analysis indicates that these negative phases have preceded every major Bitcoin bull cycle. Each instance where the metric dipped below zero aligned with late-stage capitulation dynamics: seller exhaustion, reduced distribution pressure, and a migration of coins to entities with greater holding strength.
In this context, the red zone serves less as a sign of structural weakness and more as a reset phase. It signifies a point where excessive leverage and speculative positioning have been purged, setting the stage for cycle bottoms. According to Wedson’s interpretation, opportunities arise during these depression phases rather than during profit-heavy expansions. The chart illustrates that prior bull runs did not commence while long-term holders were in comfortable profit. Instead, they emerged after losses had impacted the cohort. With the metric still positive at 0.36, the chart suggests that, based on historical patterns, the final capitulation before the next bull run has yet to occur.
Source: Chart from Joao Wedson on X
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