Bear Market Signal: In-Depth Analysis of Current Trends versus 2022 Decline

Blockchain analysis platform Looknode identifies that the ongoing bear phase displays structural patterns very similar to the market crisis that occurred in 2022. This comparison provides valuable insights into market dynamics and potential reversal points ahead. By observing key indicators and on-chain behavior, we can understand how much the current market situation parallels previous crises.

NRPL Indicator and Capital Flow Transformation

The Net Realized Profit/Loss (NRPL) metric is key to understanding fundamental changes happening in the market. During its peak in 2021, NRPL movements began to show significant divergence from price trends, signaling a shift in asset ownership structure. This phenomenon indicates that new capital flows are slowing down, while ownership rotation among market participants is intensifying.

Entering 2022, this indicator consistently remained in negative territory, marked by several episodes of sharp “acceleration of decline.” These moments reflect panic selling waves and concentrated losses within blockchain activity. This pattern shows that asset holders are under significant emotional pressure, with large-volume on-chain liquidations occurring.

Structural Similarity: When Selling Momentum Begins to Weaken

The most interesting aspect of this analysis is that the actual market foundation formed at the end of 2022 does not align with the indicator’s lowest points. Instead, reversals occurred when prices reached new lows, but the NRPL indicator did not create more extreme negative values. This phenomenon indicates that selling pressure is starting to diminish and the process of clearing losing positions has reached a critical stage.

Today, the current market structure shows two main similarities with the 2022 scenario. First, the NRPL indicator has returned to a deep negative zone. Second, episodes of “acceleration of decline” are clearly visible, with loss releases happening faster than in previous periods. The combination of these factors is a serious indication that the market has entered an emotional testing phase.

Market Foundation Identification: Reversal Signals to Watch

Historically, rapid declines in NRPL values are not direct signals of market bottom formation. However, when extreme negative values are reached and selling momentum shows signs of weakening, it generally suggests that the market is approaching a critical emotional threshold. At this juncture, market participants’ behavior typically begins to change.

Given that loss releases are happening faster than before and on-chain structure shows higher concentration, a plausible scenario to monitor is when prices hit new lows but NRPL does not produce deeper negative extremes. This condition would be a very significant reversal signal for market participants in this bear phase. Interpreting such signals should be done cautiously, but the observed structural indications suggest that the market may be preparing to enter a more stable consolidation zone.