onchained
Bitcoin: NUPL Analysis and UTXO Age Bands
NUPL, or Net Unrealized Profit/Loss, serves as a tool to gauge the equilibrium between unrealized profits and losses in the cryptocurrency market. Positive Territory (+): In positive territory, with a NUPL value above '0,' the number of coins or investors in profit exceeds those in loss. This condition arises when the Market Cap surpasses the Realized Cap, signifying that the current market value exceeds the on-chain expected value. For example, a NUPL value of 0.75 indicates a Market Cap four times larger than the Realized Cap. Negative Territory (-): Conversely, when NUPL enters negative territory (below '0'), it indicates more coins or investors in loss than in profit. This occurs when the Market Cap falls below the Realized Cap, suggesting that the traded value on the market is less than the on-chain expected value. A NUPL value of -0.5, for instance, implies a Market Cap half the size of the Realized Cap. Considering NUPL across different age bands provides insights into profitability dynamics. Notably, the depicted graph reveals all UTXO age bands currently in a profitable state, except for holders with bitcoins held for 18 months to 3 years. This aligns with their entry during the Bitcoin price rally to $67,000. Their NUPL nearing the profitability benchmark of 0 suggests a potential break-even point if Bitcoin continues its rally beyond $39,000. This situation raises the prospect of these holders selling their holdings, potentially injecting a substantial supply into the market. Monitoring such movements is crucial due to their potential impact on market dynamics. NUPL Metrics for UTXO Age Bands: 0 days - 1 week: 0.021 1 week - 1 month: 0.123 1 month - 3 months: 0.288 3 months - 6 months: 0.237 6 months - 12 months: 0.389 12 months - 18 months: 0.429 18 months - 2 years: -0.120 2 years - 3 years: -0.174 3 years - 5 years: 0.790 5 years - 7 years: 0.808 7 years - 10 years: 0.985 +10 years: 0.999