Analysis of the NUPL on-chain indicator for Bitcoin (BTC) and Ethereum (ETH) reflects the net unrealized profit or loss of coin holders. Let’s make a comparison with previous cryptocurrency bull cycles to see if the long-term trend remains bullish.
The NUPL on-chain indicator is used to calculate the total profit or loss of coins in circulation. The NUPL indicator is defined as the difference between realized losses and realized profits.
It demonstrates whether the value of all coins has become higher or lower compared to the last move. Negative values indicate that realized losses have increased and vice versa.
Historically, NUPL values above 0.75 are a sign of euphoria (blue in the chart below) and are relatively accurate in predicting market top formation. In contrast, readings below 0.25 (red) are a sign of surrender and are seen near the bottom.
NUPL for Bitcoin (BTC)
The all-time NUPL for Bitcoin (BTC) is 0.878. This level was noted in 2011. This year’s high is at 0.738.
If then the market formed a top, it would be the only time in the history of a currency that the NUPL indicator never crossed the 0.75 mark before launching a bear market.
At the moment, the NUPL indicator dropped below 0.5 (yellow line color).
Historically, a transition from green to yellow marks the beginning of a bear market. The only exception was July 2013 (black circle), when BTC reversed after two months and subsequently renewed record highs.
However, in both 2013 and 2017, during the bullish races, the NUPL held above 0.5 for about a year before the market began a bearish cycle.
In this case, the indicator exceeded 0.5 in October 2020. Thus, he spent only six months above this mark. Based on previous historical episodes, the current bull market should only end in October 2021 .
NUPL for Ethereum (ETH)
All-time NUPL high for Ether (ETH) reached 0.934. This happened in January 2017.
Unlike BTC, in the case of ETH, the indicator has already exceeded 0.75 during the current bull run. It happened in May 2021. However, the indicator has not yet dropped below 0.5.
Within the bull markets of 2016 and 2017. the transition from blue to green and then yellow (black arrow) both times indicated the beginning of a bear market.
Thus, the transition of the NUPL to the yellow zone (<0.5) can be considered an indication of the end of the current bull run.
Forecast for the movement of the cryptocurrency market
Where will bitcoin go, when will the recovery begin, and what to expect from the crypto market in the coming weeks?
So far, Bitcoin has not been able to recover after falling from all-time highs. The main cryptocurrency is stuck in a range above the support of $ 31,000, and it has not yet been possible to develop a stable upward movement. However, according to the head of the investment department of ICB Fund Aaron Chomsky, by the beginning of next month, bitcoin may rise in price to $ 37,000.
“On-chain data suggests that the majority of market participants, including miners who have suffered from the Chinese repression, have switched from selling to a mode of accumulating coins,” the expert noted. «This dynamic confirms the likelihood of a bullish scenario.»
Bitcoin oversold amid negative news
The sluggish reaction of major coins to another batch of bad news speaks about the oversold market. In particular, the ICB Fund expert notes that traders and investors have ignored new negative comments from the Chinese authorities regarding cryptocurrencies and the unfolding campaign against Binance.
Regulators in the UK, Japan and a number of other countries have announced that one of the leading cryptocurrency exchanges operates in their jurisdictions without appropriate licenses. Some demanded that the company cease its activities, and in some places a criminal case was opened on the stock exchange. Residents of these countries are having problems replenishing deposits on Binance through some major banks and payment services. Binance itself is doing great.
“This attack did not affect the position of Binance Coin (BNB), which showed the best dynamics among the top 10 cryptocurrencies in the last seven days ,” Chomsky said.
Bitcoin and most major digital coins have also escaped the drawdown, although back in June, news of the expulsion of miners from China triggered a massive sell-off.
London hardfork will drive growth for Ethereum
Ethereum will return to resistance in the $ 2,400 area and may rise to $ 2,500 by the end of the month, according to ICB Fund.
The developers of the second largest cryptocurrency in terms of capitalization have determined August 4 as the date of the London hard fork. It will implement the EIP-1559 update, which will change the mechanism for calculating fees and calculating miners’ remuneration, which, other things being equal, will reduce inflation in the network.
«This could create an ETH deficit ahead of the move to a Proof-of-Stake consensus algorithm with staking, which Goldman Sachs estimates could be a $ 40 billion industry.»
While London is already priced in for the most part, the update will support the rise in ETH prices over the long term.
