Ethereum Indicator Flags Price Bottom

The on-chain analytics firm Glassnode has revealed an Ethereum indicator that reliably flagged the price bottom in advance of the recent rally.

Ethereum NUPL Fell Into Capitulation Zone Earlier

In a new post on X, Glassnode discussed an Ethereum indicator from its joint report with cryptocurrency exchange Coinbase. The metric in question is the “Net Unrealized Profit/Loss” (NUPL), which measures the net amount of profit or loss held by investors of the asset.

The NUPL works by reviewing the transaction history of each coin on the network to compare the last movement price with the current spot price. If the previous value exceeds the current price, the token is considered to be in a state of net unrealized loss, while a token with a cost basis below the latest price is seen as in profit. The NUPL aggregates these two scenarios to calculate the overall profit/loss.

A positive NUPL indicates that investors, as a whole, are in a state of net unrealized profit. Conversely, if it’s below zero, it signifies dominance of losses in the market.

As shown in Glassnode’s chart, the Ethereum NUPL experienced a marked decline earlier this year, coinciding with a drop in the asset’s price. During this downturn, the indicator dropped to around -0.2, indicating that investors entered a net loss state. The considerable level of relative unrealized loss on the network led to sentiment being flagged as “capitulation” based on Glassnode’s methodology.

Cryptocurrency markets often trend in the direction least expected by the crowd; thus, a significant amount of losses can indicate a potential market bottom. Indeed, the NUPL’s entry into the capitulation zone appears to have preceded the price surge that followed.

As Ethereum’s price has climbed by over 20% in the past week, reaching $3,600, sentiment among investors has improved. However, the NUPL should still be monitored; a significant shift toward profit may signal another potential market correction to a downtrend.

ETH Price

Ethereum has broken away from Bitcoin as its price surged by more than 20% over the past week, reaching the $3,600 level.