Net Unrealized Profit/Loss (NUPL) is a metric used to gauge the overall sentiment of market participants by measuring the total paper (unrealized) gains and losses of all coins or assets in circulation. This metric helps to identify whether the majority of the market is currently in a state of profit or loss and can provide insights into potential market movements.
1. Unrealized Profit :.
This occurs when the current price of an asset is higher than the price at which it
was acquired, but the asset has not been sold yet. For example, if you bought
Bitcoin at $10,000 and its current price is $20,000, you have an unrealized profit
of $10,000.
2. Unrealized Loss :.
This occurs when the current price of an asset is lower than
the price at which it was acquired, but the asset has not been sold yet. For
example, if you bought Bitcoin at $20,000 and its current price is $10,000, you
have an unrealized loss of $10,000.
3. Net Unrealized Profit/Loss (NUPL) :.
is the difference between market cap and realized cap divided by market cap.
Bullish Signals :.
Low or negative NUPL values indicate a market where participants are in a state
of loss, which might suggest panic selling or capitulation, leading to a market
bottom.
Bearish Signals :.
High NUPL values might indicate an overbought market, suggesting potential
profit-taking and a market correction.
Written by Amr Taha