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These 5 on-chain indicators suggest a crypto bull cycle is around the corner

These 5 on chain indicators suggest a crypto bull cycle is around the corner

TL;DR Breakdown

  • The cryptocurrency market value is trading a little shy of the $1 trillion mark marking a sudden crypto bull cycle from the 2022 crypto winter.
  • The 5 on-chain indicators include Bitcoin flow across exchanges, MRVR ratio, Net Unrealized Profit/Loss, Puell Multiple, and CryptoQuant’s PnL index.
  • All five indicators suggest an imminent crypto bull cycle supported by previous data analysis.

The crypto market value is trading a little shy of the $1 trillion mark marking a sudden crypto bull cycle from the December lows.

Last week bitcoin rallied 22% from $17,000 to $21,000, the highest since October 2022. The run pushed its value above that of Facebook and MasterCard. Ethereum managed to hit the $16,000 mark.

In the short term, however, the market might correct momentarily following the sharp price gain last week.

Here are 5 on-chain indicators that suggest a crypto bull cycle is around the corner:

Bitcoin flow across exchanges

These 5 on-chain indicators suggest a crypto bull cycle is around the corner 1

On-chain indicators show a growing outflow of bitcoin from Coinbase to derivative exchanges. The up move suggests a ‘risk off’ to a ‘risk on’ switch by investors.

Derivatives are a high-risk form of investment as they use leverage to multiply the rate of return. 

Derivative exchanges provide leveraging opportunities. Previous trends, like the ones marked in a ‘green’ circle, have indicated market bottoms. In the last instance, Bitcoin surged from the $4,000 mark to the $50,000 peak in 2021.

MRVR ratio

These 5 on-chain indicators suggest a crypto bull cycle is around the corner 2

The MRVR ratio checks whether a particular coin is cheap (undervalued) or expensive (overvalued). When the ratio is in the red region, i.e., over 3.7, it is considered expensive, and when it is in the green area, i.e., below 1, it is considered cheap.

Analysts derive MRVR by dividing a coin’s market cap (market price) by its actual market cap.

The bitcoin MRVR ratio is at 1.07, just above the cheap region. The same instance is close to the market capitalization of Bitcoin (orange line), signaling an imminent bull cycle. 

Net Unrealized Profit/Loss (NUPL)

These 5 on-chain indicators suggest a crypto bull cycle is around the corner 3

Net Unrealized Profit/Loss (NUPL) is the average profit margin of all participants holding a particular coin. Similar to MRVR, it indicates whether the coin is cheap (undervalued) or expensive (overvalued).

According to Cryptoquant, previous data analysis, 70% profit margins (0.7) suggested market tops while levels -40% profit margin (-0.4) suggested market bottom.

The bitcoin NUPL ratio is close to the orange line (365 days moving average), which signifies the beginning of an uptrend.

Puell Multiple 

These 5 on-chain indicators suggest a crypto bull cycle is around the corner 4

Puell Multiple is a ratio of a coin’s daily issuance in USD to the 365-day moving average. Besides determining the coin’s pricing, it also indicates miner profitability and income stress.

The ratio indicates the coin is expensive (overvalued) when it is in the red area, i.e., above 4, and cheap (undervalued) when it is in the green area, i.e., below 0.5.

The Bitcoin Puell muller is just above the green area in the chart and has also crossed above the 365-day moving average, suggesting that it is in a bullish trend. The last time bitcoin made a similar move was in November 2020.

CryptoQuant PnL index

These 5 on-chain indicators suggest a crypto bull cycle is around the corner 5

The CryptoQuant PnL index combines the NUPL, MVRV, and LTH/STH SOPR into a single indicator.

When the coin’s PnL index (dark purple line) crosses above the 365-day moving average (light purple line), analysts consider it bullish, triggering a buy signal. Analysts consider it bearish when it breaks below the moving average, triggering a sell signal. A PnL index above 1, i.e., in the red region, suggests that the coin traders have overvalued it, while when it is below -1.38, i.e., in the green area, it indicates that the coin is undervalued.

The Bitcoin PnL index is close to triggering a buy signal, which happens when it crosses above the 365-day moving average, i.e., when the dark purple line breaks above the light purple line.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

Brian Koome

Brian Koome

Brian Koome is a cryptocurrency enthusiast who has been involved with blockchain projects since 2017. He enjoys discussions that revolve around innovative technologies and their implications for the future of humanity.

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