Bitcoin ATH date already found?

How long will this Bitcoin accumulation phase last? When will the next BTC bull rally begin? To answer these questions, we will use the indicator Net Unrealized Profit/Loss (NUPL).

NUPL: Bitcoin accumulation phase continues

The indicator Net Unrealized Profit/Loss (NUPL) is the difference between unrealized profit and unrealized loss. To calculate it, just use the following formula:

NUPL = total market cap – realized market cap / total market cap.

The on-chain analysis platform represents the NUPL indicator by a graph composed of 5 different colors. These correspond to the different emotional states (from fear to greed) that most investors action at different stages of the Bitcoin cycle.

These colors make it easier to identify recurring phases of the Bitcoin cycle and can also give us an idea about the future trajectory of the market.

Currently, Bitcoin’s NUPL is in the yellow zone (between 0.25 and 0.50), meaning investors are optimistic. Based on historical data, this area has always coincided with the bitcoin accumulation phase that precedes the bull market (blue squares).

It should also be noted the accumulation phase (yellow area) is always preceded by a capitulation phase (red area). During this phase, Bitcoin usually falls to a bottom before starting to recover.

nonetheless, there are exceptions. For example, in 2020, the NUPL fell into the red zone twice due to the Covid-19 pandemic.

Note also that when the NUPL indicator reaches the yellow zone after a period of bull market, the market is generally in a state of fear.

How long will this phase last?

Using the chart above, we can attempt to predict the future trajectory of the Bitcoin price. In other words, we can both predict how long the initial phase of the bull market will last, as well as when Bitcoin will reach the peak of the current cycle.

First, we are going to assume that Bitcoin has definitely left the fear zone, which corresponds to a NUPL ranging from 0 to 0.25. nonetheless, if the market continues to decline for some reason, the NUPL could return to the orange or even red zone as we have seen in 2020.

In this case, our first hypothesis would become invalid. Similarly, Bitcoin could create a double bottom pattern.

Second, we are going to assume that the current accumulation phase of Bitcoin will be similar to previous phases and will last around 7 months (32 weeks). We arrived at this figure by taking the arithmetic mean of the three preceding accumulation periods (30, 41 and 25 weeks respectively).

Third, we will assume that Bitcoin will reach the peak of the current cycle approximately 12 months (or 51 weeks) after the start of the last phase of the bull market. This figure corresponds to the arithmetic mean of the previous cycles. In the first cycle, BTC reached an ATH around 46 weeks after the start of the last phase of the bull market (green zone). In the second cycle, it took him 51 weeks to reach an ATH. And in the third cycle, it took him 55 weeks.

When is the next Bitcoin ATH?

We will now compare the results obtained with the current market situation. Thus, we will assume that the accumulation phase of Bitcoin started around mid-June 2023.

Then, the NUPL indicator moved out of the orange zone (hope) to enter the yellow zone (optimism). It is worth remembering that if the NUPL again falls into the orange zone, we will have to redo our calculations.

Otherwise, it can be assumed that the accumulation of Bitcoin started about 7 weeks ago. Subtracting this from the average accumulation period (32 weeks), we have about six months left. Thus, the first part of the bull market should last until the end of January 2024.

Next, we will add the average length of previous bull markets (about 12 months) to the remaining six months of the current accumulation phase. As a result, the peak of the current cycle, or the next Bitcoin ATH, should be reached around the second half of January 2025 (green line).

Are these predictions accurate?

It should be noted that the above calculations contradict the Bitcoin cycle theory, which is based on the halving. According to this theory, the second phase of the bull market can only begin after the halving. This should take place in avril 2024.

Likewise, the duration between the bottom of the cycle (which was recorded in November 2022) and the start of the second phase of the bull market should be considerably shorter than the two previous cycles.

According to the cycle theory, the accumulation phase lasts about 2 years. Nevertheless, the NUPL indicator indicates that this phase will last only 14 months.

Although not 100% accurate, the NUPL indicator gives us some interesting insights into the crypto market. And as explained above, predictions can be invalidated by certain unexpected events, such as pandemics, macroeconomic events and waves of FUD. They should therefore be taken with a grain of salt.

Moral of the story: After the rain comes the positive weather.