On-chain analytics firm GlassNode has revealed the Ethereum indicator that has certainly flagged the bottom of prices ahead of the recent rally.
Ethereum Nupl fell into the Quote zone previously
In a new post on X, GlassNode discussed the Ethereum indicator in its joint report with Cryptocurrency Exchange Coinbase. The indicator in question is “net unrealized profits/losses.” This, as the name suggests, measures the net profit or loss currently held by investors across the assets.
The metric works by going through the transaction history of each coin on the network to see the last price that was moved. If this previous transfer value exceeds the current spot price of the token, then that particular token is assumed to be in a net unrealized loss state.
Similarly, cost-based coins below the latest prices are considered in profit. NUPL summarises the extent of profit/loss included in both cases and calculates their differences.
If the value of the indicator is positive, it means that the entire investor is sitting in a state of net unrealized profits. On the other hand, being under the zero mark means controlling losses in the market.
Now, here is the chart shared by the analytics company.
As seen in the graph above, Ethereum Nupl observed a significant decline at the beginning of the year when the prices of assets fell sharply. In this charge the indicator went down to about -0.2. This suggests that investors have fallen into a net loss state.
Not only that, the relative unrealized losses present on the network were prominent enough for emotions to flag them as “suffrage” under the GlassNode methodology.
The presence of massive losses can lead to bottom as cryptocurrency markets move in the direction the crowds are least expected. From the charts, this appears to have happened when the NUPL fell into the surrender zone.
Prices continue to surge as sentiment among this low Ethereum investor naturally improves. However, NUPL could be a focus because if the balance shifts overwhelmingly towards profits, another market change could be more likely.
ETH Price
Ethereum is away from Bitcoin as this price has grown by more than 20% in the past week to reach the $3,600 level.
Dall-E, Glassnode.com featured images, tradingView.com charts