What is NUPL?

In addition to SOPR (Spent Output Profit Ratio) in Bitcoin on-chain analysis, there is another classic indicator—NUPL (Net Unrealized Profit and Loss), which is also a commonly used tool for judging market sentiment and capturing cycle turning points.

NUPL is calculated as: (Market Cap − Realized Cap) ÷ Market Cap.

Here is a brief explanation of two terms:

Market Cap: The market capitalization calculated by multiplying the current Bitcoin price by the circulating supply, representing the valuation the market is currently willing to assign to Bitcoin.

Realized Cap: Not calculated using the current price, but by taking the price at the last time each unspent Bitcoin on-chain was moved, multiplying by the quantity, and summing them all up, representing the concept of the market’s “average cost basis.”

Therefore, NUPL essentially answers one question: Compared to the market’s average holding cost, is the current market valuation showing large profits or large losses?

How to Interpret the Values?

Assume that at this moment, everyone in the market simultaneously settles their coins at the current market price:

NUPL > 0: Indicates that more investors are in profit than in loss. Because market cap exceeds realized cap, it means the market trading value is higher than the “expected cost value” on-chain.

For example, if NUPL reaches 0.75, it means market cap is 4 times the realized cap. It can reasonably be inferred that most moved coins are in profit, and this large price gap itself may create selling pressure.

NUPL < 0: Indicates that more investors are in loss than in profit. At this point, realized cap exceeds market cap, meaning the market trading value is lower than the on-chain cost basis.

For example, if NUPL reaches -0.5, it means market cap is only two-thirds of realized cap. It can reasonably be inferred that most moved coins are in loss, and such a price gap may instead create buying motivation (people feel it is cheap).

Looking at the Trend: Which Direction Is Sentiment Moving?

NUPL rising trend: Indicates that more and more investors are turning profitable, which naturally increases the motivation to “take profits,” and selling pressure rises accordingly; it also means market cap is gradually exceeding realized cap, making selling coins profitable.

NUPL falling trend: Indicates that more and more investors are falling into losses, at which point the motivation to “cut losses” actually decreases (no one wants to sell at a loss), so selling pressure reduces; it also means realized cap is gradually exceeding market cap, making selling coins increasingly unprofitable.

Practical Application: Key Thresholds

The most commonly used aspects of NUPL are these two rules of thumb:

NUPL > 0.7: Usually viewed as a signal close to the market top. This means market cap greatly exceeds realized cap, the market is in a state of high profitability, and investors have strong motivation to take profits, which can easily drive up selling pressure and lower the average cost basis. It serves as a warning zone reminding investors to be cautious and consider taking profits in batches.

NUPL ≤ -0.2: Usually viewed as a signal close to the market bottom and a potential buying opportunity. This means realized cap exceeds market cap, coins in the market are generally in a loss-making state where selling is unprofitable. Under such conditions, strategic investors often begin to accumulate at lower prices, which may instead push the price to form a bottom.

⚠️ Note: These two thresholds are primarily market rules of thumb from before 2024.

With the launch of spot ETFs and the addition of new types of buyers such as DAT (corporate-level digital asset treasuries) into Bitcoin’s holder structure, the market’s holding structure and capital characteristics have already changed from before. From my own observation, after this structural shift, NUPL’s volatility has shown a converging trend. Whether the past rules of thumb—“above 0.7 is a top” and “below -0.2 is a bottom”—still apply requires more cycle data for verification. I will continue to monitor whether NUPL’s correlation with Bitcoin price is undergoing structural change.

Simple Summary for New Readers

NUPL can be thought of as the market’s average profit-and-loss thermometer—higher values mean the market is greedier, everyone is enjoying bigger gains, and it is closer to a point where caution is warranted. Lower values (entering below the zero line) mean the market is more fearful and people are generally accepting losses, which may instead be a zone for picking up bargains.

When viewed together with SOPR, SOPR captures whether the coins being moved right now are in profit or loss, while NUPL captures the overall profit-and-loss atmosphere of the market. The two complement each other to provide a more complete picture of the market’s cycle position.

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Bitcoin On-Chain Analysis Basic Concepts - NUPL

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