Introduction
Bitcoin remains the flagship cryptocurrency and a leading indicator for the broader crypto market. To navigate its volatile cycles, investors increasingly rely on on-chain data metrics — direct measurements from the Bitcoin network that reveal underlying market dynamics. These indicators provide actionable insights into trend reversals and investor behavior.
In this guide, we explore five critical on-chain metrics that signal transitions between Bitcoin's bullish and bearish phases, helping you make data-driven investment decisions.
1. Net Unrealized Profit/Loss (NUPL)
NUPL quantifies market sentiment by comparing the relative unrealized profit to unrealized loss across all Bitcoin holders.
Scale Interpretation:
- Below 0.25: Bearish (market fear)
- Above 0.25: Bullish (market greed)
- Extremes (0 or 1): Capitulation or euphoria phases
Why It Matters:
NUPL identifies psychological turning points. For instance, in April 2023, NUPL crossed 0.25 upward — a historical precursor to bullish momentum.
👉 Discover how NUPL predicts market cycles
2. Realized HODL Ratio
This metric contrasts the value transferred by:
- New investors (holding <1 week)
- Long-term holders (1–2 years)
Key Insights:
- Spikes: Indicate overheated markets (short-term dominance).
- Lows: Signal accumulation phases (long-term holder confidence).
- Current Value (April 2023): 500–600, suggesting a market bottom.
Pro Tip: More reliable for detecting bottoms than tops due to the stability of long-term holder behavior.
3. Miners Revenue Z-Score (2Y)
What It Measures:
Standardized miner revenue over a 2-year period, highlighting profitability extremes.
- Negative Z-Score: Miner capitulation (bearish).
- Positive Z-Score: Revenue recovery (bullish).
Recent Trend: The Z-score flipped positive in early 2023, aligning with miner-led market复苏.
4. STH Profit/Loss Ratio
Formula: Short-Term Holder (STH) Profit Supply / Loss Supply
Behavioral Patterns:
- Above 1: Bullish (STHs profit, incentivizing holds).
- Below 1: Bearish (STHs sell at break-even).
Application:
Tracks support/resistance shifts. During bull markets, STH cost basis acts as dynamic support.
5. On-Chain Cost Basis of STH vs. LTH
Compares the average acquisition price of:
- Short-Term Holders (STH)
- Long-Term Holders (LTH)
Historical Signals:
- Bull Markets: STH cost > LTH cost (upward momentum).
- Bear Markets: STH cost < LTH cost (rare, but marks bottoms).
April 2023: STH cost dipped below LTH — a strong bullish reversal indicator.
👉 Learn how cost basis analysis protects your portfolio
FAQs
Q1: How often should I check these metrics?
A: For long-term investors, monthly reviews suffice. Traders may monitor weekly.
Q2: Which indicator is most reliable for spotting bottoms?
A: The LTH/STH cost basis crossover has a near-perfect track record.
Q3: Can these metrics predict exact price tops?
A: No — they highlight probabilities of trend changes, not precise price levels.
Q4: Why focus on miner data?
A: Miners are Bitcoin’s "base layer." Their financial stress or health directly impacts market liquidity.
Q5: Are these tools suitable for altcoins?
A: Primarily Bitcoin-centric, but similar principles apply to major cryptocurrencies with robust on-chain data.
Final Thoughts
Mastering these five on-chain indicators equips you to:
✅ Anticipate trend reversals
✅ Avoid emotional trading
✅ Spot accumulation/distribution phases
Remember: No single metric is infallible. Combine them with macroeconomic analysis for optimal results.