Quant explains how the Bitcoin NUPL cycle has become increasingly volatile over time

Bitcoin NUPL data shows that the cryptocurrency’s cycles become less sharp over time as profit tops and loss bottoms do not follow horizontal lines.

Bitcoin NUPL has no ‘greed’ mark above 0.75 in this cycle

As one analyst in CryptoQuant explained postalthe BTC profit and loss cycle should not be handled with horizontal lines.

This”Unrealized net profit and loss” (or NUPL for short) is an indicator that tells us whether the overall market is now at a net profit or a net loss.

The value of this indicator is calculated by calculating the difference between market capitalization and market capitalization Realize the upper limitthen divide by the market capitalization.

NUPL = (Market Cap – Realized Market Cap) ÷ Market Cap

When the value of this indicator is greater than zero, it means that ordinary investors currently hold a certain profit.

On the other hand, a negative NUPL value means that the entire market is currently holding a net amount of unrealized losses.

Now, here is a chart showing how Bitcoin NUPL has trended over the course of crypto history:

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

As you can see in the image above, the quantitative indicator has marked the relevant trend area of ​​the Bitcoin NUPL indicator.

In the past, many traders used to believe that a cycle top would be formed whenever the indicator value surged above 0.75, entering the “greed” zone.

Likewise, when the indicator falls below the -0.4 mark and enters the “fear” zone, it is believed that a bottom will occur.

However, the analyst for the post believes that horizontal lines like these should not be used to mark the tops and bottoms of these cycles.

In the first two cycles, the subsequent top was lower than the previous top. In the current cycle, the indicator has never entered the greedy zone and peaked around the 0.75 level. This could mean the top is getting lower and lower with each cycle.

Likewise, the last two bottoms also have falling loss volumes. Not long ago, the value of NUPL fell sharply into negative territory before bouncing back to positive after forming a potential bottom. However, this low was a far cry from the traditional 0.4 mark.

If this low is indeed the bottom of the cycle, it would further justify the idea that the market’s profit and loss volatility has become less dramatic over time.

BTC price

As of this writing, price of bitcoin Floating around $24.4k, up 5% over the past 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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