- Bitcoin could be heading into another bull cycle.
- This is based on the NUPL, MVRV Ratio and Puell Multiple metrics.
Bitcoin [BTC] Pseudonymous CryptoQuant analyst Tarekonchain noted in a new report that it may be preparing for another rise despite recently retreating from its 2023 peak of $44,000 report.
These indicators point to a further bullish rally
Tarekonchain evaluated three key on-chain indicators and found that their values have been gradually increasing recently.
Based on these metrics, the analyst concluded
“Bitcoin’s bear market could ease, giving way to the early stages of a bull cycle.”
The first metric the analyst considered was BTC’s net unrealized profit/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 held by investors with the current market price. If it rises above zero and remains in the uptrend, it means BTC holders are making profits.
According to Tarekonchain, a rising NUPL indicates an increasingly profitable market, which often correlates with bullish sentiment.
At 0.48 and in an uptrend, the analyst said:
“NUPL’s current performance suggests a rise in market optimism, which is a typical harbinger of a bull market.”
Source: CryptoQuant
What the MVRV ratio says
Another metric evaluated by CryptoQuant analyst was the market value to realized value ratio (MVRV) of BTC.
The MVRV ratio of an asset represents the relationship between the current market price of the asset and the average price of each coin or token purchased of that asset.
A positive MVRV ratio above one signals that an asset is overvalued, while a negative MVRV value indicates that the asset is undervalued. Based on a 30-day small moving average, BTC’s MVRV has increased by 11% over the past 30 days.
According to Tarekonchain:
“The recent upward move in the MVRV ratio from these lower levels could be a signal that the market is moving from undervaluation to a phase where growth is expected, indicating the start of a bull cycle.”
Source: CryptoQuant
Finally, the analyst looked at BTC’s Puell Multiple. This indicator provides insights into the profitability of mining operations on the BTC network.
When the value of the metric increases, mining revenue is relatively high compared to the long-term average. On the other hand, a low Puell multiple indicates that mining revenues are relatively low compared to the historical average.
Echoing BTC's historical performance, Tarekonchain noted that a low puell multiple often marks market bottoms and many see this as an opportunity to accumulate the leading coin.
Read Bitcoins [BTC] Price prediction 2023-24
As this indicator has been trending upwards recently, the analyst concluded:
“A gradual increase in this multiple from its lower levels can be interpreted as a reduction in selling pressure and increased profitability for miners, consistent with the possible start of a bull cycle.”
Source: CryptoQuant
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