First Negative Change in Net Unrealized Profit/Loss (NUPL) Since March 2020 Net Unrealized Profit/Loss (NUPL): What is it? What was the Bitcoin price predicted by NUPL?
What does NUPL mean in crypto?
An on-chain indicator called NUPL reveals if the market is making money or losing money. Simply dividing relative unrealized gains by relative unrealized losses yields it.
Positive values indicate that the market is making a profit, while negative values indicate that it is losing money. If all coins purchased at prices higher than the current market price were sold, the value would be higher than if all coins purchased at prices lower than the current market price were sold. This is referred to as a state of loss.
Market cycle peaks historically have been at or near 0.75 (blue), while troughs have been below 0. (red).
Current breakdown
Regarding the fluctuations of NUPL above and below the 0.5 line, there is an intriguing relationship between the BTC market cycle and this asset. Crosses below 0.5 (black circles) after an extended upward trend indicate the start of a new negative market cycle. But occasionally two crossings are necessary for the downward trend to start.
In January 2022, NUPL went below 0.5 for the second time, and since then has been rapidly declining.
Negative NUPL
When NUPL dropped below 0.5 in the two prior market cycles, it immediately rebounded (black circles). This came about as a result of a last-ditch relief rally before a drop.
In the present breakdown, however, such was not the case (blue circle). On June 19, the indicator dropped to -0.06 after dropping below the threshold of 0.25. This level was also attained in March 2020. (red circles). The Net Realized Profit/Loss indicator likewise reached a new record low as a result of it.
When will BTC price drop?
The bottoms of the past two market cycles (shown by the black circles) were at -0.56 and -0.36, respectively. The current reading still has a lot of room to fall in comparison to them. However, it is important to note that the 2015 bottom was hit 19 days after NUPL entered the red. The 2018 low was also reached 24 days after a similar drop. Therefore, even in this scenario, a quick absolute bottom would be anticipated.
It is likely that BTC has already bottomed and will continue rising toward new highs if this is not an absolute bottom but rather a local one, similar to the one in March 2020.
Whatever happens, it appears that at least a relief rally is possible.
