Net Unrealized Profit and Loss (NUPL)
Net Unrealized Profit and Loss (NUPL) is the difference between market cap and realized cap divided by market cap.
Net Unrealized Profit and Loss (NUPL) is the difference between market cap and realized cap divided by market cap.
Assuming that the latest coin movement is the result of a purchase, NUPL (Net Unrealized Profit and Loss) indicates the total amount of profit/loss in all the coins represented as a ratio.
- Values over ‘0’ (+): Coins or investors who are in profit are more than investors that are in loss In order for NUPL to be over 0 (+), the Market Cap has to be larger than the Realized Cap. As Market Cap exceeds the Realized Cap, it indicates that the value that is being traded on market is greater than the on-chain expected value. For example, if the NUPL value hits 0.75, it means that Market Cap is four times the Realized Cap. It is reasonable to assume that most coins that were moved are on profit and the wide gap between the Realized Cap and Market Cap could act as selling pressure.
- Values under ‘0’ (-): Coins or investors who are in loss are more than investors that are in profit In order for NUPL to be under 0 (-), the Market Cap has to be less than the Realized Cap. As Realized Cap exceeds the Market Cap, it indicates that the value that is being traded on market is greater than the on-chain expected value. For example, if the NUPL value hits -0.5, it means that Market Cap is half the Realized Cap. It is reasonable to assume that most coins that were moved are on loss and the wide gap between the Realized Cap and Market Cap could act as a buying motive.
It shows the changing profit geography of investors
- Increasing trend: Increasing selling pressureMore coins or investors are beginning to be in profit and this phase naturally indicates the increasing motive to take profit which leads to an increase in sell pressure. Also, it indicates that Market Cap is exceeding Realized Cap making coins profitable to be sold through the market.
- Decreasing trend: Decreasing selling pressureMore coins or investors are beginning to be in loss and this phase naturally indicates the decreasing motive to realize loss which leads to a decrease in sell pressure. Also, it indicates that Realized Cap is exceeding Market Cap making coins less profitable to be sold through the market.
Historically, it has been spotted that Bitcoin market with a NUPL of 0.7 or higher turned out to be closer to the market top. For investors, it would be wise to take a cautionary approach to market when NUPL points above 0.7.
Also, market with a NUPL of -0.2 or less turned out to be closer to the market bottom. For investors, it could be a buying opportunity and accumulate bitcoin.
- Net Unrealized Profit (NUP): Sum of UTxO being in profit with the price difference between created and destroyed.
- Net Unrealized Loss (NUL): Sum of UTxO being in loss with the price difference between created and destroyed.
- Net Unrealized Profit and Loss(NUPL): The difference between market value and realized value
Last modified 1yr ago