A Simple Strategy for Buying and Selling Bitcoin Based on On-Chain Indicators
Have you ever wondered how you could time your buying and selling moves for Bitcoin more effectively? Axel Adler Jr., a CryptoQuant author, recently shared a straightforward strategy based on historical trends observed in two essential BTC on-chain metrics: the Net Unrealized Loss (NUL) and Net Unrealized Profit (NUP).
Understanding Net Unrealized Loss and Net Unrealized Profit Indicators
- The Net Unrealized Loss (NUL) tracks the total amount of unrealized loss that investors currently hold.
- Conversely, the Net Unrealized Profit (NUP) monitors the total unrealized profit held by investors.
- These indicators analyze the transaction history of each circulating coin to determine the current cost basis based on the last transacted price of each coin.
- If a coinโs previous price was lower than the current spot price, it signifies a profit, while the NUL calculates the unrealized gain, and NUP does the same for coins with a cost basis exceeding the assetโs latest value.
- The final value is divided by the current market cap to provide an overall picture.
Historical Patterns of NUL and NUP Indicators
- The NUL indicator traditionally reaches its minimum during bear markets, indicating the optimal time to purchase more Bitcoin.
- Currently, the NUL is hovering around zero due to Bitcoin hitting new all-time highs, resulting in all supply being in profit.
- Similar to NUL, the NUP has historically surpassed the 0.7 level near significant market peaks, suggesting it might be an opportune moment to sell.
- While the recent rally in Bitcoin has boosted the NUP, it has not yet breached the crucial 0.7 level, signaling that the market may not be overheated for selling.
- Both indicators have not consistently predicted exact tops or bottoms in the market. However, following the buy signal from NUL and selling during NUP peaks has historically been profitable.
Bitcoin Price Update
As of now, Bitcoin is priced at approximately $69,400, showing a 2% decrease in the last 24 hours.
It will be interesting to observe if these historical patterns continue to play out in the current Bitcoin cycle.
Hot Take: Analyzing Bitcoin Buy and Sell Strategy Using On-Chain Indicators
An analyst has revealed a simple strategy for buying and selling Bitcoin using the historical pattern followed by two BTC on-chain indicators.
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