Quant Explains How Bitcoin NUPL Cycles Are Getting Less Volatile With Time

Bitcoin NUPL data indicates that crypto cycles become less severe over time as profit tops and loss bottoms don’t follow a horizontal line.

Bitcoin NUPL hasn’t crossed the 0.75 “greedy” mark during this cycle

As explained by an analyst at CryptoQuant MailBTC profit and loss cycles should not be treated with horizontal lines.

The “net unrealized profit and loss“(or NUPL for short) is an indicator that tells us whether the market as a whole is holding a net profit or a net loss at the moment.

The value of the scale is calculated by taking the difference between the market value and the value of detective coverDivide it by market value.

NUPL = (market value – realized value) ÷ market value

When the value of this indicator is greater than zero, it means that the average investor is currently holding some profit.

On the other hand, negative NUPL values ​​indicate that the market as a whole is holding a net amount of unrealized losses at the moment.

Now, here is a chart showing the trend in Bitcoin NUPL over the history of the cryptocurrency:

Bitcoin NUPL

Looks like the value of the metric has surged up and turned positive again recently | Source: CryptoQuant

As you can see in the above chart, the quantum identifies the relevant trend areas of the Bitcoin NUPL indicator.

In the past, many traders used to believe that cycle tops formed whenever the value of the scale rose above 0.75, entering the “greedy” zone.

Likewise, bottoms were thought to occur when the index fell below the -0.4 mark, and reached the “fear” area.

However, the analyst from the publication argues that horizontal lines like these should not be used to mark the peaks and troughs of this cycle.

During the previous two sessions, the peak that follows was lower than the previous one. In the current session, the gauge never crossed the greedy zone and topped around the 0.75 level. This may mean that the peaks are lower and lower with each cycle.

Likewise, the last two troughs also had descending losses. A while ago, the value of NUPL fell sharply to negative and later rebounded to positive values ​​after forming a potential bottom. However, this drop was far from the traditional 0.4 mark.

If this bottom was truly the bottom of this cycle, it would add more credence to the idea that profit and loss fluctuations in the market become less severe over time.

BTC price

At the time of writing this report, Bitcoin price It is floating around $24.4K, up 5% in the last week.

Bitcoin price chart

The value of the crypto seems to have been moving sideways recently | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com

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