Quant Explains How Bitcoin NUPL Can Help Predict Bull Cycles

Keshav Verma

3 years ago

3 mins read

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A quant breaks down how the Bitcoin NUPL indicator may be able to predict the beginning of a new bull run based on past pattern.

How The Bitcoin NUPL Metric May Predict The Start Of Bull Run

As explained by an analyst in a CryptoQuant post, 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 Cap

In 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.

Now, here is a chart that shows the trend in the BTC NUPL over the past ten years:

The correlation between the BTC price and the indicator's values | Source: CryptoQuant

As you can see in the above graph, the quant has marked three different regions of importance for the Bitcoin NUPL metric.

It looks like whenever the metric has crossed above the red line, a BTC bull run has also begun in tandem. The green region, on the other hand, seems to be when the crypto is undervalued, and bottom formations take place.

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: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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