NUPL shows signs of a downtrend – Bitcoin (BTC) On Chain Analysis

[ad_1]

BeInCrypto examines on-chain indicators for Bitcoin (BTC), specifically Market Value to Realized Value (MVRV) and Net Unrealized Profit Loss (NUPL)

Z-score MVRV

MVRV is defined as the ratio between market capitalization and realized levels. Values ​​greater than one indicate that the market capitalization is greater than the realized capitalization. The MVRV Z score uses a standard deviation to normalize the values.

On January 24, the indicator reached a value of 0.85. The low is the first time the indicator has fallen into the 0.80-1.20 range since September 2020, when the current bull cycle was just beginning. Historically, values ​​above this zone have been associated with uptrends, while those below have occurred during bear markets.

Therefore, for the cycle to remain intact, MVRV must bounce and move outside of this zone. A breakdown below 0.8 would confirm that the long-term trend has turned bearish.

Chart by GlassnodeNUPL

NUPL is an indicator that measures the total amount of profit or loss for investors. A reading below 0 means the market is in overall loss, while a reading above 0 indicates the market is in overall profit.

During the previous market cycle, values ​​above 0.75 (blue) were associated with highs. Conversely, those below 0.25 (red) with dips.

In early January, NUPL fell below the 0.5 region. This is a bearish development, since it is the second time that it has gone below this level, after that of July 2021 (black circle).

In previous market cycles, the NUPL has only fallen below the 0.5 level once after previously breaking above it while trending up. Therefore, the second drop below 0.5 market the end of the uptrend (red circle).

However, it should be noted that the current cycle is the first in which the NUPL has not risen above 0.75 at all. Therefore, if the current bullish cycle is over, this would be the only time that NUPL did not break above 0.75. Otherwise, this would be the first time the indicator has fallen below 0.5 twice before retracing the line.

Therefore, the ensuing movement is crucial in determining the future trend. Another recovery of the 0.5 line would go a long way in suggesting that the trend is bullish, while a drop below 0.25 would almost confirm that the trend has turned bearish.

Chart by Glassnode

For the latest Bitcoin (BTC) analysis from BeInCrypto, click here

Disclaimer All information contained on our website is published in good faith and for general information purposes only. Any action the reader takes on the information found on our website is strictly at their own risk.

[ad_2]