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Bitcoin (BTC) Net Unrealized Profit/Loss (NUPL) Between Fear and Optimism

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Bitcoin price has been correcting since reaching a local peak at $28,580 on October 2. Since then, the bears have managed to push down the price of the largest cryptocurrency into the $26,500 area. What’s next for the BTC price?

At the same time, the well-known on-chain Net Unrealized Profit/Loss (NUPL) indicator shows the ongoing battle between areas of fear and optimism. Despite a bullish start of 2023 and an escape from the capitulation zone, Bitcoin price corrections continue to return to the fear area.

Will the Bitcoin Risk Index, which has currently reached its lows, finally keep the cryptocurrency market in the optimism zone and initiate a new bull market?

NUPL Between Fear and Optimism

Net Unrealized Profit/Loss (NUPL) is an on-chain metric that calculates the difference between relative unrealized profit and relative unrealized loss.

Another way to calculate this ratio is to subtract realized market capitalization from total market capitalization and divide the result by the latter.

The NUPL chart contains five horizontal areas, which are interpreted from the market psychology perspective: from the red capitalization level to the blue area of euphoria and greed.

The intermediate areas have both bullish and bearish interpretations depending on whether the chart crosses the area during a bull or bear market.

Currently, Bitcoin NUPL is in the yellow, rather neutral area of optimism at 0.26. At the same time, the indicator is close to the orange level of fear, which begins after a drop below 0.25.

Net Unrealized Profit/Loss for Bitcoina / Source: Glassnode

As we can see, the area of optimism is the highest level the Bitcoin NUPL has been at since early 2023. As recently as mid-January, the indicator was consolidating at the lowest capitulation level, only to become optimistic as the cryptocurrency market recovered quickly.

However, the specter of a d

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Author: Jakub Dziadkowiec

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