Peer-reviewed (Elsevier, 2026): beat buy-and-hold, but its own sibling MVRV beat it
ORIGINATED BY Attributed to Tuur Demeester / Adamant Capital et al. (2019); popularised by Glassnode
At the very top of a bull run, almost every coin in existence is worth more than the price its holder paid for it. The whole network is drowning in profit — on paper. Nobody has sold. NUPL puts a single number on that collective daydream: the fraction of Bitcoin's entire value that exists only as unbanked gains. When it screams euphoria, everyone is rich and nobody has proved it. When it plunges below zero, the average coin is underwater, and the network is in mourning.
NUPL measures the aggregate paper profit or loss of the entire Bitcoin network as a share of its total value. It compares two quantities: market cap, what all coins are worth at today's price, and realized cap, the sum of what every coin was worth the last time it moved on-chain — a rough proxy for the aggregate cost basis of all holders. The gap between them is the network's total unrealized gain. Divide that gap by market cap and you get a bounded ratio: the percentage of Bitcoin's value that is profit nobody has yet locked in.
The intuition is behavioural. On-chain, every coin carries a memory of the price at which it last changed hands. If the current price sits far above that remembered price, holders are sitting on large unrealized gains — and history says that's when greed peaks, weak hands feel invincible, and tops form. When price falls below the aggregate cost basis, NUPL turns negative: the average holder is at a loss, capitulation sets in, and that pain has historically marked cycle bottoms. NUPL is, in effect, a market-wide mood ring built from cost-basis arithmetic rather than sentiment surveys.
Practitioners carved the curve into named emotional zones — from capitulation and hope through optimism and belief up to euphoria and greed — with high positive readings flagging the danger zone near the top and negative readings flagging the bottom. The appeal is that it reads psychology from the ledger itself, with no polling, no self-report, and no way to fake the underlying transactions.
Here is the fact that keeps NUPL honest: it is a monotonic transform of MVRV. Both are built from exactly the same two inputs — market cap and realized cap — just rearranged. MVRV is their ratio; NUPL is essentially one minus the inverse of that ratio. Whenever MVRV rises, NUPL rises; when MVRV falls, NUPL falls, in lockstep. They cannot disagree about a top or a bottom because they are the same signal wearing different clothes. NUPL is not a second, independent witness — it is MVRV's reflection.
That relationship is exactly why NUPL earned peer-reviewed attention alongside MVRV. The 2026 Elsevier study by Grobys, Näsman and Sandretto tested it across three market cycles and found it beat both a passive buy-and-hold benchmark and a random-entry Monte Carlo strategy. Genuine result — but read on, because the same paper that vindicated NUPL also quietly demoted it.
THE MATHS
NUPL = (Market Cap − Realized Cap) / Market Cap
= 1 − (Realized Cap / Market Cap)
= 1 − (1 / MVRV) ← a monotonic transform of MVRVLIVE READ
The indicator, as it reads right now.
THE HONEST READ · LIMITATIONS
Where this indicator lies to you.
Start with the sibling problem. Because NUPL is a monotonic transform of MVRV, it carries no information that MVRV doesn't already contain. When someone shows you a chart where NUPL and MVRV both flag the same top, that is not two indicators agreeing — it is one indicator counted twice. Treating them as independent confirmation is a category error, and it inflates false confidence. In the same 2026 study, the MVRV Z-Score outperformed NUPL — so if you're going to hold the family, the evidence points to the sibling, not this one.
Then the caveats it shares with the whole cost-basis family, which the authors are candid about. The profitable thresholds — the euphoria and capitulation cutoffs — were tuned with hindsight on the very cycles they were then tested against. That is in-sample fitting, and in-sample results systematically flatter a signal. The strategy also fired only a tiny number of trades across a handful of cycles, so the track record rests on a statistically thin sample where a single lucky call can dominate the average. Bitcoin has lived through only a handful of on-chain cycles; you cannot build strong statistical confidence on so few data points.
Finally, the structural drift. Realized cap assumes every on-chain move reprices a coin's cost basis, but lost coins, exchange internal shuffles, wrapped BTC and custodial rehypothecation all blur what 'cost basis' even means at scale. As the holder base matures and long-term conviction deepens, the historical euphoria threshold may simply stop being reached — the mood ring recalibrated for a market that no longer exists. Use NUPL as one honest, backward-looking gauge of crowd psychology. Do not use it as a second opinion on MVRV, because it isn't one, and do not mistake a hindsight-tuned line for a law of nature.
THE CITATIONS
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