3. Net Unrealized Profit/Loss (NUPL): Mapping Psychological Phases of the Cycle
Part of Chapter 04: On-Chain Valuation & Market Cycle Metrics
- Relative unrealized profit vs loss across all active coin holders
- The 5 Psychological Zones: Capitulation, Hope, Optimism, Belief, and Euphoria
- Historical top threshold: NUPL > 0.75
Net Unrealized Profit/Loss (NUPL) measures the difference between Relative Unrealized Profit and Relative Unrealized Loss. It provides a direct window into the collective psychological state of the market.
When NUPL is below zero (Capitulation), total market unrealized losses outweigh profits. Market participants are in despair and selling at losses—the hallmark of bear market terminal bottoms.
As the market climbs through Hope (0.0 to 0.25), Optimism (0.25 to 0.50), and Belief (0.50 to 0.75), paper profits expand. When NUPL crosses above 0.75 into Euphoria, virtually every holder is sitting on massive paper gains, creating extreme vulnerability to profit taking.
\text{NUPL} = \frac{\text{Market Cap} - \text{Realized Cap}}{\text{Market Cap}}Mathematical Explanation: Values range from < 0 (Capitulation, red zone) to > 0.75 (Euphoria, blue mania zone).
In a raging bull run, NUPL can stay in the Euphoria zone (>0.75) for 4 to 8 weeks. Do not panic-short immediately on entry; wait for the first bearish rollover below 0.70 to confirm institutional distribution.
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All Lessons in Chapter 04
On-Chain Valuation & Market Cycle Metrics (10 Lessons)