Net Unrealized Profit/Loss (NUPL)

Imagine a fruit stand owner who buys crates of apples at different prices throughout the year.

At any given moment, the owner can look at the current market price for apples and compare it to what was paid for each crate, but since the apples haven’t actually been sold yet, any profit or loss is only “on paper.”

Now, picture adding up all these potential gains and losses across every crate to see, as a percentage of the fruit stand’s total apple value, whether the owner would be making or losing money if they sold everything right now, even though none of the apples have left the stand.

This is exactly how Net Unrealized Profit/Loss (NUPL) works in the world of Bitcoin: it’s a snapshot of the entire market’s “on paper” profits and losses, helping you understand whether holders as a group are sitting on gains or nursing losses.

📖 What is NUPL?

NUPL measures the difference between unrealized profits and losses in the Bitcoin market relative to the total market capitalization. It’s calculated using this formula:

NUPL = (Market Cap - Realized Cap) / Market Cap

Its key components are:

Market Value (Cap): Current Bitcoin price × number of coins in circulation
Realized Value (Cap): Average price of each Bitcoin when it was last moved × number of coins in circulation

It measures whether the network as a whole is in a state of profit or loss, adjusted for individual entities (e.g., avoiding double-counting exchange wallets).

NUPL was developed by Tuur Demeester, Tamás Blummer, and Michiel Lescrauwaet.

What NUPL Tells Us

Positive NUPL (> 0): Indicates that, on average, investors are holding their coins at a profit. The higher the value, the greater the unrealized profits in the market.
Negative NUPL (< 0): Suggests that, on average, investors are holding their coins at a loss.

Market Sentiment Zones

NUPL values can be segmented into different zones to reflect market sentiment:

Euphoria/Greed (NUPL > 0.75): A high level of unrealized profits, often preceding market tops.
Belief/Denial (0.5 < NUPL ≤ 0.75): Investors are in significant profit, but the market may be approaching a peak.
Optimism/Anxiety (0.25 < NUPL ≤ 0.5): Moderate profits; market direction is uncertain.
Hope/Fear (0 < NUPL ≤ 0.25): Minimal profits; market may be recovering from lows.
Capitulation (NUPL < 0): Investors are, on average, at a loss; potential market bottom.

Market Cycle Identification

NUPL helps identify different phases of Bitcoin’s market cycle:

Euphoria: High positive values show excessive optimism.
Capitulation: Negative values indicate widespread losses.
Recovery: Values moving from negative to positive show market healing.

Example

If NUPL is 0.7, it means 70% of the market cap is unrealized profit, which means that most investors are in profit, and the market may be approaching a top.
If NUPL is -0.1, the market is in aggregate unrealized loss, which often aligns with market bottoms and potential buying opportunities.

🔍 How to Read the Chart

This chart titled “BTC: Entity-Adjusted NUPL” shows Bitcoin’s Net Unrealized Profit/Loss (NUPL) over time.

📊 Chart Components

🟠 Orange Line: Entity-Adjusted NUPL
⚫ Black Line: BTC Spot Price
Colored Regions:
- 🔵 Euphoria/Greed (NUPL > 0.75)
- 🟢 Belief/Optimism (0.5-0.75)
- 🟡 Hope/Fear (0.25-0.5)
- 🟠 Anxiety/Denial (0-0.25)
- 🔴 Capitulation (NUPL < 0)

📈 Interpreting the Chart

NUPL > 0.5 (Green/Blue zones):
- Most of the market is in profit.
- Often seen in bull markets, especially when it crosses above 0.75 (Euphoria).
- Historically aligns with macro tops (2011, 2013, 2017, 2021).
NUPL < 0 (Red zone):
- Most of the market is at a net loss.
- Often signals capitulation and market bottoms (2012, 2015, 2020, 2022).

In the shown chart (May 2025):

NUPL is in the yellow-green range (~0.4-0.6), suggesting the market is in profit but not overheated.
No sign of euphoria yet → likely mid-cycle, not near a macro top
Historically, transitions from green to blue signal late-stage bull runs.

🧠 Why Traders Care

A high NUPL (esp. > 0.75) means extreme unrealized profits → risk of profit-taking and tops.
These periods (red band on NUPL charts) have historically been good times to take profits.
A low NUPL (< 0) indicates widespread losses → often bottoming signals.
Historically, extreme NUPL values have coincided with major market tops (euphoria/greed) and bottoms (capitulation), helping traders identify potential turning points

⤵️ How NUPL Predicts Market Tops

High NUPL Values (typically above 0.75 or 0.8):

When NUPL reaches high positive values, it indicates that most investors are sitting on significant unrealized profits.
Historically, these levels have coincided with euphoric market sentiment and have often preceded major market tops.
At these points, the incentive to take profits increases, leading to heightened selling pressure and, frequently, the start of a correction or bear market.

Market Psychology:

High NUPL values correspond to phases of greed and euphoria, which are classic signals of an overheated market and potential blow-off tops.

⤴️ How NUPL Predicts Market Bottoms

Low or Negative NUPL Values (typically below 0 or -0.8):

When NUPL falls into negative territory, it means the majority of holders are at an unrealized loss, as more coins were purchased at higher prices than the current market price.
This often aligns with periods of fear, capitulation, and market bottoms.
Historically, these moments have marked strong accumulation opportunities and the end of bear markets.

Market Psychology:

Severely negative NUPL values reflect widespread capitulation and pessimism, signaling that selling pressure may soon exhaust itself, setting the stage for a market recovery.

⚠️ Effectiveness and Limitations

Bottoms:

NUPL has proven highly effective at identifying market bottoms, as capitulation phases are usually accompanied by negative or very low NUPL values.

Tops:

While NUPL can signal when the market is entering a euphoric, overbought state, its accuracy in pinpointing the exact top is somewhat lower, as profit-taking can occur over an extended period, and tops may form gradually.

⚙️ Trading Strategy

Buy: Consider accumulating when NUPL is deeply negative or near historical bottom thresholds.
Sell/Reduce Exposure: Consider taking profits or reducing risk when NUPL approaches historical top thresholds (e.g., above 0.75 or 0.8).
Confirmation: For best results, NUPL should be used alongside other indicators and market data to confirm signals and manage risk

🟠 Summary Table

NUPL is an on-chain metric that measures the difference between unrealized profits and losses in the Bitcoin market, relative to the total market capitalization. It provides a snapshot of the aggregate “paper” profit or loss held by all bitcoin holders at a given time

NUPL Value	Zone Name	Interpretation	Market Signal
> 0.75	Euphoria/Greed	Extreme unrealized profits	Market top risk
0.5 – 0.75	Belief/Optimism	Broad profit; trend continuation	Bullish momentum
0.25 – 0.5	Hope/Fear	Recovery phase	Neutral-to-bullish
0 – 0.25	Anxiety/Denial	Unstable sentiment	Reaccumulation possible
< 0	Capitulation	Widespread losses	Possible market bottom