Current Market Structure Replicates 2022 Crisis Patterns: Analysis of Key Indicators

Recent analysis by Looknode on X reveals that the current market structure shows significant similarities to the 2022 bear cycle. This finding is based on the behavior of key technical indicators that reflect market psychology and asset liquidation patterns.

The NRPL Indicator as a Mirror of the Bear Market

During the 2021 bull cycle, the Net Realized Profit/Loss (NRPL) indicator began to diverge from price movements. This disconnect signaled a weakening in new capital inflows and a significant increase in the rotation of existing holdings.

As 2022 progressed, the NRPL remained consistently in negative territory, marked by successive episodes of accelerated decline. These movements reflected both panic-driven sales and chain-concentrated losses. Currently, in 2026, the market structure has again replicated this behavior: the indicator is once more in deep negative territory, with an accelerated decline similar to that observed four years ago, indicating that losses are being realized at a faster rate.

Accelerated Declines and Holding Rotation: Signs of Exhaustion

Historically, rapid declines in the NRPL do not immediately signal a market bottom. However, when these negative values reach severe extremes and the downward momentum begins to weaken, the market typically approaches a critical emotional limit.

The 2022 market structure revealed a crucial pattern: the true bottom in the fourth quarter did not coincide with the lowest point of the NRPL indicator. Instead, it occurred when prices touched new lows without the indicator reaching deeper negative values. This divergence indicated exhaustion of selling pressure and a conclusion of position liquidations with accumulated losses.

Identifying the Market Bottom: When Prices and Indicators Converge

The current market structure suggests a similar scenario. If prices reach new lows while the NRPL does not record new negative extremes, it could be a significant bottom signal. This convergence between price action and indicator weakness historically marks the turning point where selling pressure is exhausted and the first signs of strategic accumulation begin to emerge.

The faster realization of losses and a more concentrated market structure in fewer hands imply different dynamics from previous cycles. Monitoring the market structure and the behavior of the NRPL in relation to new price lows will be key to identifying when the market has truly reached its maximum weakness.