Ethereum on-chain analysis: NUPL and MVRV reach critical levels

In this article, Bitcoin Magazine takes a look at Ethereum’s (ETH) on-chain metrics, more specifically Net Unrealized Profit / Loss (NUPL) and Market Value at Realized Value (MVRV).

NUPL

NUPL was created to determine the total profit or loss from moving a coin. To determine this, the difference between the current price and the price at the last movement is compensated for for each coin in circulation.

Values ​​above zero indicate that the realized gain is greater than the realized loss, while values ​​below zero indicate the opposite is true.

Historically, values ​​above 0.75 indicate a top, while values ​​below 0.25 indicate a low.

The indicator reached an annual high of 0.77 (black circle) in January, a signal that the market is overheating.

It then fell below the threshold of 0.5 (red circle) twice, which was then considered a sign of weakness as the upward trend had weakened.

Previously, a decline below 0.5 (black circle) marked the end of the bull cycle. Hence, it is important that the indicator stay above this level.

MVRV

MVRV is the ratio between the market capitalization and the actual capitalization of a coin. Put simply, an MVRV of 3 means that the market capitalization is three times the actual capitalization.

A high can be taken as a sign of a high, indicating that the market is overbought. Likewise, a low reading can be viewed as a sign of a bottom, indicating that the market is oversold.

Historically, the 1.9 level seems to have acted as support for ETH. This was the case in July and September 2017 when both the price and the indicator bounced after a low at 1.9 (black circle). Therefore, this value is linked to a local low point before ETH resumes its upward trend.

This level also acted as resistance in August 2020 before turning into support (black line). There was a significant deviation in July 2021, but the indicator returned to this level shortly afterwards.

MVRV is currently trading just above this level and is likely to provide a rebound.

Similar to 0.5 in NUPL, 1.9 is critical in MVRV. Therefore, the indicator has to hold above this level in order for the upward trend of ETH to remain intact.

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