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.

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

Bitcoin NUPL

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.

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