Crypto enthusiasts' sentiment suggests Bitcoin price is far from a market top

  •  Bitcoin's NUPL holds in denial as investors remain optimistic for gains to another record high.
  • The NUPL has in the past stayed in greed for over two months, the market top still at large.

Bitcoin price stalled after failing to break the resistance at $40,000. As reported earlier this week, JPMorgan & Chase strategists believe that BTC will retreat if it fails to hit levels above $40,000. However, according to Glassnode's Net Unrealized Profit/Loss (NUPL), the market is far from hitting the top. Therefore, from the investors' sentimental analysis, Bitcoin has the potential to rise to another record high.

Understanding Bitcoin's NUPL and how it predicts bull market tops

The Net Unrealized Profit/Loss (NUPL) is the difference between the Relative Unrealized Profit and the Relative Unrealized Loss. The metric takes into consideration the actual USD value of Bitcoin that is currently in profit/loss.

Investors are greedy when a large percentage of Bitcoin's market is made up of unrealized profits. According to Glassnode, this ratio tends to drop while prices fall, leading to fear among investors. In instances where unrealized gains turn into unrealized losses, Bitcoin goes into a phase referred to as capitulation and apathy, as illustrated in the chart below.

Bitcoin NUPL chart

Bitcoin Relative Unrealized Profit/Loss

It is worth noting that investors would sell more when Bitcoin is in greed because most realize gains. On the other hand, if investors sold during capitulation, they will make losses. Therefore, investors are likely to buy more, hoping that the prices will rise in the near future.

A historical glance at the NUPL highlights instances this on-chain metric has predicted market reactions. For example, the market hit a NUPL ratio of 0.83 in June 2011. A percentage of 0.75 upwards shows that investors are engulfed by greed. Correction is almost prominent at these levels, but Bitcoin price can hold for months before its correction begins. In 2011 this period lasted for at least two months.

The bull market in 2011 culminated in groundbreaking declines toward October, where Bitcoin price hit $2 from highs close to $30. The NUPL value dropped to -1, highlighting capitulation and apathy.

As mentioned, demand rises with a lower NUPL figure, which explained the impressive recovery in 2012 and 2013—the ratio held in the denial/optimism zone until 2014 before dropping to 0.82 in January 2015. At the time, BTC exchanged hands around $211 ahead of the bull-run, topping $20,000 in December 2017.

Currently, the NUPL ratio stands at 0.68, representing denial/optimism. Despite the tremendous rally since October 2020, investor sentiment remains optimistic that Bitcoin is yet to hit its local market top. If The NUPL rises into the greed region, Bitcoin may rally to $50,000 first, perhaps $60,000 before a significant correction comes into the picture.

Bitocin NUPL

Bitcoin NUPL chart

It is worth mentioning that the renowned trader and analyst Peter Brandt believes that Bitcoin is bound for a dump before it pumps again to a higher high. His prediction is based on Bitcoin's performance in 2016, where the initial hump to slump was only a simple correction. This was followed by a pump that brought in fear of missing out (FOMO) in retail investors.

Nonetheless, the pump was succeeded by a more prolonged correction where the dump sifted out the FOMO investors. Bitcoin later started to pump, resulting in the new highs posted in 2017.

BTC/USD price chart

Meanwhile, Bitcoin is trading at $35,360 amid the push for a rebound eyeing $40,000. Some resistance is anticipated at $36,000 and later at $38,000. Price action above these two key levels is likely to validate gains beyond $40,000.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Experts say Ripple will win SEC lawsuit, which might propel XRP to new all-time highs

Since XRPArmy and lawyers in the crypto ecosystem consider the US Securities & and Exchange Commission’s (SEC) move to pull documents out of public view as evidence that the case is coming to a close, a Ripple win appears more likely.

More Ripple news

Bitcoin Weekly Forecast: BTC must hold $45K to target new all-time highs

Bitcoin price is on a rollercoaster ride as it crashed violently on September 7, consolidated for a few days after that and went on an uptrend to undo the losses. Over the past 24 hours, however, BTC seems to be consolidating for a volatile move without a clear directional bias.

More Bitcoin News

Chiliz price to retrace before CHZ runs up

Chiliz price is stuck in a tight consolidation above a crucial support floor and shows no signs of recovering from this slump. In fact, CHZ might retrace lower before heading on an uptrend.

More Chiliz News

ICX Price Prediction: ICON prepares for 20% descent as bulls fade away

ICON price looks ready for a swift downswing after an explosive run over the past ten days. The crypto markets’ slowdown after the recent run-up makes this bearish scenario a perfect fit. Going forward, investors can expect ICX to head lower and retest stable support barriers.

More Cryptocurrencies News


Bitcoin Weekly Forecast: Markets revert to mean, but BTC price remains indecisive

Bitcoin price shows considerable strength after springing from the recent crashes. Still, it is uncertain whether the current bullish impulse will morph into a new uptrend or lead to a more profound decline.

Read the weekly forecast