The Bitcoin NUPL indicator can be used to forecast the beginning of a bull run by analyzing past patterns.
How the Bitcoin NUPL Metric may Predict Bull Run Start
An analyst explained in CryptoQuant that the NUPL indicator’s various phases may provide some insight into the current bull market status of 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
This indicator, in simpler words, tells us how profitable or losing Bitcoin investors are currently.
A NUPL value above zero means that the market is in profit on an average. On the other hand, the market as a whole is in a state of profit if the indicator’s value is more than zero.
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Below is a chart that illustrates the BTC NUPL’s trend for the past ten year:
Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the quant marked three distinct regions of significance for the Bitcoin NUPL Metric.
The BTC bull market has started in tandem with the crossing of the red line when the metric has crossed over the red. On the contrary, the green area is when crypto is low-valued and bottom formations occur.
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The analyst believes that the yellow area is an indicator of the dividing line between bear and bull trends. The beginning of a bear market has been historically defined by crossing below the bar.
The Bitcoin NUPL sits just above the region. A new bear season could start if it falls below the NUPL. This region has been noted by the quant as being a support zone during middle-of-cycle cycles, and it was already used as such recently.
BTC price
Today, Bitcoin’s price has plunged down below the $38k mark continuing its recent downfall. As of this writing, Bitcoin’s price is at around $37.6k. That 10% drop in seven days has caused a significant decline in its value. The crypto’s value has dropped 8% over the last month.
The chart below shows how Bitcoin’s prices have changed over the course of the last five business days.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts