BTC On-Chain Analysis: NUPL Supports Continuation of Bull Market

A look at on-chain indicators for both Bitcoin (BTC) and Ethereum (ETH) in order to make sense of the current market movements.

Net Unrealized Profit/Loss (NUPL) has moved above the 0.5 threshold once more, possibly signaling the continuation of the bull run.

NUPL for BTC

NUPL is an indicator that is used to in order to calculate profits and losses. In order to do so, it measures the difference between realized profits and losses.

Values above 0 state that realized profits are higher than realized losses, while the opposite is true for values below 0.

Historically, values above 0.75 have indicates tops, while those below 0.25 have indicated bottoms.

In our previous NUPL analysis, we stated that the indicator usually stays above 0.50 for roughly a year before falling and signaling the beginning of a bear market. More specifically, “Going by previous history, the bull market would be expected to end some time in Oct. 2021.”  

However, it only stayed above 0.5 for six months in the current bull run. The ensuing drop from above 0.5 (green) to below 0.5 (yellow) was a bearish sign that previously had marked the beginning of bear markets.

Interestingly, the NUPL has now moved above 0.5 once more, as evidenced by the color change of the line to green. Therefore, the current readings are similar to those in 2013. On June 2013, NUPL fell below 0.5, potentially marking the beginning of a bear market. However, it pumped shortly afterwards and proceeded to reach a new high 0f 0.838 near the end of the year, which was also combined by a new all-time high in the price of BTC.

If the same were to occur, it would mean that the BTC price would continue increasing for roughly four more months before eventually beginning its bear market.

The same thing is visible when looking at the entity adjusted NUPL, who has just moved above 0.5, as outlined by analyst @mskvsk.

Ethereum

The NUPL for ETH has twice fallen below 0.5, both times indicating the beginning of bear markets (black arrows). 

While it purportedly did so last month, it immediately bounced back upward above 0.5 (green arrows). Therefore, the reading can also been seen as a bounce at support, since the current value is 0.67.  

Therefore, the NUPL reading for ETH does not indicate that the token is in a bear market.

For BeInCrypto’s latest bitcoin (BTC) analysis, click here.