Unit 2 · Level 3 · On-chain valuation
NUPL and profit waves
NUPL (Net Unrealized Profit/Loss) takes the gap between market cap and realized cap and expresses it as a share of market cap. It reads like a thermometer of aggregate emotion: deep negative values got labelled 'capitulation', high positive ones 'euphoria'. When price rises into a euphoric zone, profit-taking arrives in waves: early buyers cash out, coins change hands, and the market's average cost basis climbs toward the price.
Free to play. No ads, no token, no account needed to start.
What you get asked
Conceptually, what does NUPL measure?
NUPL = (market cap − realized cap) ÷ market cap. Positive means the average coin is in profit; negative means aggregate paper losses.
Order the classic emotional journey NUPL traces across a full cycle
The zone names are storytelling on top of arithmetic, but the arithmetic is real: profits build, get taken, and cost basis ratchets up as coins change hands.
When long-term holders sell into a rally, coins reprice to new buyers and the market's aggregate cost basis moves ___.
Every coin sold at €60k to a new buyer now carries a €60k cost basis in realized cap. Profit-taking literally transfers cost basis upward.
Why does heavy profit-taking often appear BEFORE major tops rather than at them?
Distribution is a process, not a moment. On-chain data shows old coins waking and selling for weeks or months into strength, one of its more useful reveals.
The honest way to use NUPL's labelled zones ('euphoria', 'capitulation') is…
The zones summarise real arithmetic with theatrical names. Use them to locate the cycle's mood, and remember the sample size is a handful of cycles. 🐜
The rest of this unit
The blockchain remembers what everyone paid. Turn that memory into valuation gauges.