NUPL forms a golden cross
On-chain data shows Bitcoin Net Unrealized Profit and Loss (NUPL) forming a golden cross, a sign that could be bullish for the price.
Bitcoin NUPL 60-day MA has crossed above 365-day MA
An analyst in a CryptoQuant post pointed out that this crossover pattern has been repeated several times since 2013. “Net Unrealized Profit and Loss” (NUPL) is an indicator that tells us the amount of unrealized profit or loss that Bitcoin investors are currently holder.
By “unrealized” is meant here that the owners have not yet sold/transferred their coins to reap the profit or loss they have accumulated. If the investors were to sell these coins, the same amount of profit/loss they had would be “realized”.
NUPL calculates this unrealized profit/loss by subtracting the realized cap (a capitalization model for BTC that accounts for the price at which each coin in the chain was purchased) from the market value. The calculation then simplifies this value by dividing it by the market value.
When the metric has a positive value, the average investor has an unrealized profit, while negative values suggest that unrealized losses dominate the market. Naturally, the indicator having a value equal to zero suggests that the holders are only breaking even at the moment.
Here is a chart showing the trend of two moving averages (MA) of Bitcoin NUPL: 60-day and 365-day versions.
Looks like these two metrics have crossed each other in recent days | Source: CryptoQuant
BTC has observed strong bullish momentum whenever the 60-day MA crosses above the 365-day MA. However, there have been some exceptions. In the graph above, the quant has marked the relevant points in the trend of the 60-day and 365-day MAs of Bitcoin NUPL.
The graph shows that the last time this type of crossover took place was in late 2021 when the bull run in this cycle was at its peak. But not too long after, the opposite kind canceled this golden crossover and BTC only saw a bearish effect.
Recently, the MAs of Bitcoin NUPL have again started to form the bullish crossover formation. This time, at least so far, the breakout looks like a proper one, as the 60-day has risen sharply above the 365-day already, unlike the previous case, where the former never gained much height above the latter before curling back and forms the opposite cross.
If the latest golden cross does indeed end up being the real thing, BTC could be gearing up for a strong bull rally if the historical pattern is anything to go by.
BTC price
At the time of writing, Bitcoin is trading around $26,600, up 34% in the past week.
BTC seems to have surged recently | Source: BTCUSD on TradingView
Featured image from Dylan Leagh at Unsplash.com, Charts from TradingView.com, CryptoQuant.com
