A Bitcoin (BTC) on-chain indicator that spotted dead cat bounces during the yesteryear surly market corrections has flashed again in August 2022.

Dubbed "Bitcoin: Short Term Holder NUPL," the indicator takes into account the unspent transaction output, or UTXO, of BTC transactions not more than 155 days sometime. In doing so, it attempts to determine whether an investor is profitable within 155 days of purchasing and holding Bitcoin.

Therefore, if the NUPL, which stands for "cyberspace unrealized turn a profit/loss," returns a reading beneath aught, it means investors are making a loss on their Bitcoin investments. Conversely, a NUPL higher up nothing shows that investors are making a profit.

Glassnode reported Aug. 12 that the Bitcoin NUPL for short-term investors recovered back above zero, signifying their assisting state for the first time since May 2022's crypto market crash. Meanwhile, the blockchain analytics platform also signaled fears of potential sell-off, citing fractals from the 2022–2015, 2022 and March 2022 conduct cycles.

Bitcoin short-term holder NUPL chart. Source: Glassnode

In item, short-term Bitcoin holders have used the recovery rallies during corrections to secure acting profits.

The price action from the 2022–2015 bearish season shows BTC/USD resuming its downside correction despite a 100% rebound. Similarly, in 2022, a 97.41% upside retracement did little to secure the market from the prevailing bearish bias.

Bitcoin toll recoveries did not final during the 2022–2015 and 2022 surly cycles. Source: TradingView

The latest upside recovery in 2022 came later the prices of Bitcoin crashed from circa $65,000 to around $29,000. The cryptocurrency rallied to $46,787 on the Bitstamp substitution following a major rebound afterward — a 63.59% spring.

Bitcoin corrected lower again on Aug. 12, falling below its psychological support level of $45,000. At its intraday low, the cryptocurrency was changing hands for $44,100.

BTC/USD cost performance in recent history. Source: TradingView

The dissenting bullish instance

Glassnode noted that such "rapid recoveries" are common in two cases: comport market relief rallies and atheism phases of bull markets.

Therefore, in saying so, the blockchain analytics platform did non rule out the possibility of an extended balderdash run, such as the one seen during the upside booms of 2022, 2022 and 2022.

More evidence corroborating the bullish outlook came from Glassnode's report published earlier this calendar week. The platform spotted a refuse in curt-term holders in line with a rise in long-term holders, insomuch that the Bitcoin supply held by long-term holders reached a new all-time high of 82.68% of all the coins in circulation.

Related: Large hodlers accumulate Bitcoin beneath $50K equally BTC transactions over $1M soar

Meanwhile, the money possessed by short-term holders dropped to 25% of the internet Bitcoin supply in apportionment, suggesting a run-up in holding behavior.

Long- and short-term holder supply ratio. Source: Glassnode

Historically, when the short-term holder ratio drops to 20%, information technology leads to a supply squeeze scenario — i.due east., when coins in apportionment autumn brusk of the current need.

"This is extremely similar to the volume of coins held by [long-term holders] in Oct 2022 before the primary bullish impulse started," Glassnode analysts wrote, calculation:

"Whilst the supply squeeze based on the [short-term holder] Supply Ratio is not however at twenty%, in that location are numerous indicators and trends in play that suggest it may hit information technology in mid-September (merely that the conditions for a supply clasp are already in play)."

Bitcoin was trading around $44,200 at the fourth dimension of writing.

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