Hey @vinamra. Thank you for your question! I did not say that hydrogels are biocompatible, but nano-cellulose is.

Moreover, CNCs have proven excellent biodegradability (cellulose nanoparticles were found to degrade faster than their macroscopic counterpart)(31) and have low ecotoxicological risk.(32) From a toxicological point of view, cellulose-based materials have been generally showing excellent biocompatibility on a bulk basis(33, 34) and, CNCs in particular, exhibit low cytotoxicity to a range of animal and human cell types.(32, 35-39) Although some studies have recently suggested that cytotoxic responses can occur at high CNCs concentration,(40, 41) those are still significantly lower than the ones found for other nanofibers such as multiwalled carbon nanotubes and crocidolite asbestos,(41) providing the impetus for their use in bioapplications.

Cited from this source. I hope this answers your question.
Cheers!