As at the time of writing this report, Bitcoin (BTC) price reacted as high as $45,200 on Aug. 8, 2021, the highest level since before the infamous May 19 crash. Meanwhile, there are increasing speculations that BTC could undergo a similar upside boom like the one that began in October 2020.
At least two indicators expected Bitcoin to pursue massive uptrends. The first one was Glassnode’s Entry-Adjusted Net Unrealized Profit/Loss that assists investors in determining whether the Bitcoin network as a whole is currently in a state of profit or loss.
Understanding NUPL and its heat map
A NUPL reading above zero indicates that the network is in a state of net profit, while values below zero indicate a state of net loss. The further NUPL deviates from zero, the more it helps investors spot market tops and bottoms.
They spot the degree of deviations from zero via a heat map. For example, during an uptrend, red indicates “capitulation,” orange means “hope,” yellow shows “optimism,” green hints “belief,” and blue underscores “euphoria.”
In October 2020, the Bitcoin NUPL moved upward of zero as its heat map changed colors from yellow to green after successfully bouncing off the red zone in March earlier that year.
Later, the prices moved from approximately $10,000 to around $65,000.
Bitcoin dropped later to below $30,000, a period that saw its NUPL mood switching from greed to denial and later to anxiety. But a strong buying sentiment near the $30,000 level helped sustain Bitcoin’s upside sentiment intact, offsetting anxiety with optimism.
But just as Bitcoin reclaimed $40,000 and exceeded its upside momentum, the sentiment switched back to belief for the first time since October 2020. Lex Moskovski, Chief Investment Officer at Moskovski Capital, also highlighted Bitcoin’s upside prospects following the NUPL upgrade in a tweet, saying:
“We’ve entered the Belief phase.”
Alternatively, the popular Fear and Greed Index also touched 69, a score that indicates a sentiment of Greed, which the market also hasn’t seen since May.
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