The price of Bitcoin went on to react as high as $44,600 on the 7th of August- which is the highest level that was reached since the 19th May crash. At the same time, there have been speculations afoot that the cryptocurrency might just be going through another upside boom similar to the one that began in October 2020.
There are a couple of indicators that do expect the cryptocurrency to go ahead and pursue huge uptrends. The first one involves Glassnode’s Entry-Adjusted Net Unrealized Profit/Loss which would definitely assist most investors in trying to determine if the network of BTC was in a state of loss or profit.
Understanding Bitcoin’s NUPL and its heat map
A reading on NUPL which goes above zero goes to indicate that the network currently is in a state of net profit. A value below zero indicates a position of net loss. The further one’s NUPL deviates from the value of zero, the more it helps market investors spot market bottoms and tops. Several analysts are able to spot the degree of said deviations from zero through a heat map.
This is usually prevalent in an uptrend, where red implies capitulation, while orange implies hope. Yellow reflects optimism, while green hints at belief, and euphoria are underscored by blue. Last October saw the NUPL of Bitcoin move upward with the heat map changing multiple colors from yellow to green after it bounced off the red zone in March.
The price of Bitcoin later dropped below a sum of $30,000- which is a period where the NUPL switched its mood from greed to denial and then to anxiety. But due to a strong buying sentiment that was prevalent near the level of $30,000, Bitcoin was able to sustain its upside sentiment- wherein it replaced anxiety with optimism.
Interestingly, as soon as Bitcoin went on to reclaim the sum of $40,000 and further exceeded its upside momentum, the sentiment went back to belief for the very first time since last year.