Net Unrealized Profit/Loss (NUPL)

This indicator combines Bitcoin market capitalization and investors taking profits. Here’s a breakdown of the key components:

• Market Value: Calculated by multiplying the current Bitcoin price by the total circulating coins. Similar to traditional market cap calculations, it represents the overall market valuation.
• Realized Value: Instead of using the current Bitcoin price, Realized Value considers the price of each Bitcoin at its last movement between wallets. By averaging these individual prices and multiplying by the total coins in circulation, it provides a unique perspective on value.

Using the Indicator for Bitcoin Price Prediction:

• Market Heatmap: Observing the ratio between market cap and profit-taking reveals market conditions. A rapid increase in market cap compared to profit-taking suggests overheating, often attributed to investor greed (depicted in the red band).
• Strategic Insight: Analyzing different percentages of Bitcoin Relative Unrealized Profit/Loss helps identify market stages. This is particularly valuable for long-term strategic investors looking to optimize their positions.

Forecasting Bitcoin Price Movements:

• The NUPL indicator, based on historical data, shows greater efficacy in predicting bottoms than in predicting tops. By leveraging on-chain data to capture market participant emotions, NUPL plays a crucial role in anticipating potential highs or lows in Bitcoin prices.

This tool assists the investor in identifying which stage of the Bitcoin cycle they are in, which can be combined with the DCA strategy to take advantage of opportunities during downtrends.