Posted:
- Bitcoin could be poised for a new bull cycle.
- This is based on measurements of the NUPL, MVRV Ratio and Puell Multiple.
Bitcoin [BTC] may be gearing up for another surge despite a recent pullback from its 2023 high of $44,000, pseudonymous CryptoQuant analyst Tarekonchain noted in a new report.
These indicators point to a new bullish rally
Tarekonchain assessed three key indicators in the chain and found that their values have gradually increased recently.
Based on these measurements, the analyst concluded that
“Bitcoin’s bear market may be waning, giving way to the early stages of a bull cycle.”
The first metric the analyst considered was BTC’s net unrealized gain/loss (NUPL). The NUPL metric determines whether BTC holders are currently experiencing unrealized gains or losses.
It compares the average purchase price of all BTCs that investors hold with the current market price. When it rises above zero and remains in an uptrend, it means BTC holders are making a profit.
According to Tarekonchain, a rising NUPL indicates an increasingly profitable market, which is often accompanied by bullish sentiment.
At 0.48, and in an uptrend, the analyst opined:
“NUPL’s current trajectory indicates an increase in market optimism, which is a typical precursor to a bull market.”
Source: CryptoQuant
What the MVRV ratio says
Another metric assessed by the CryptoQuant analyst was BTC’s market value to realized value (MVRV) ratio.
An asset’s MVRV ratio follows the ratio between the current market price of the asset and the average price of each acquired coin or token of that asset.
A positive MVRV ratio above one indicates that an asset is overvalued, while a negative MVRV value indicates that the asset is undervalued. When assessed on a small 30-day moving average, BTC’s MVRV is up 11% over the past 30 days.
According to Tarekonchain:
“The recent upward movement in the MVRV ratio from these lower levels may signal that the market is transitioning from undervaluation to a growth phase, signaling the start of a bull cycle.”
Source: CryptoQuant
Finally, the analyst took BTC’s Puell Multiple into account. This indicator provides insight into the profitability of mining activities on the BTC network.
When the value of the measure increases, mining revenues are relatively high compared to the long-term average. On the other hand, a low Puell Multiple indicates that mining returns are relatively low compared to the historical average.
Based on BTC’s historical performance, Tarekonchain noted that a low Puell Multiple often marks the market’s bottom, and many see this as an opportunity to amass the leading coin.
Read Bitcoin’s [BTC] Price forecast 2023-24
With this indicator showing an upward trend lately, the analyst concluded:
“A gradual increase in this multiple from lower levels could be interpreted as a reduction in selling pressure and increased profitability for miners, in line with the potential onset of a bull cycle.”
Source: CryptoQuant