How The Bitcoin NUPL Metric May Predict The Start Of Bull Run
As explained by an analyst in a CryptoQuant , the various phases of the NUPL indicator may shed some light relating to the bull run status for BTC.The net unrealized profit and loss (or NUPL in short) is a metric that’s defined as the difference between the market cap and the realized cap, divided by the market cap.
NUPL = (Market Cap – Realized Cap) ÷ Market CapIn simpler terms, what this indicator tells us about is the degree of profit or loss Bitcoin investors as a whole currently observe. When NUPL values are above zero, it means holders are, on average, in profit. On the other hand, the market as a whole is in a state of profit if the indicator’s value is more than zero.
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The correlation between the BTC price and the indicator's values | Source:As you can see in the above graph, the quant has marked three different regions of importance for the Bitcoin NUPL metric.
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According to the analyst, the yellow region is a divider between bull and bear trends. Crossing below this bar has historically marked the beginning of a new bear market.Currently, the Bitcoin NUPL is right above this region, and if the metric goes down and crosses below it, a new bear period may start. However, the quant has noted that this region can serve as support during the middle of a cycle as well, as it already did once recently.
BTC Price
Today, Bitcoin’s price has plunged down below the $38k mark continuing its recent downfall. At the time of writing, the price of the coin floats around $37.6k, down 10% in the last seven days. Over the past month, the crypto has lost 8% in value.
The below chart shows the trend in the price of BTC over the last five days.BTC's price seems to have sunk down over the past few days | Source:
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com