The crypto market value is trading a little shy of the $1 trillion mark marking a sudden crypto bull run from the December lows. CryptoQuant is an on-chain data aggregator that provides valuable insights to the investing public and corporates.
The company has its capital in Seoul, South Korea, and its CEO, Ki Yong Ju, founded it in 2018. The platform lowers the hurdle for data-driven investing by providing on-chain data, chart and price indicators, exchange flows, and other related statistics.
Last week bitcoin rallied 22% from $17,000 to $21,000, the highest since October 2022. The run pushed its value above that of Facebook and MasterCard. Ethereum managed to hit the $16,000 mark.
In the short term, however, the market might correct momentarily following the sharp price gain last week.
Here are CryptoQuant’s 5 metrics that suggest an early bull run:
Bitcoin flow across exchanges
On-chain statistics indicate a growing outflow of bitcoin from Coinbase to derivative exchanges. The up move suggests a ‘risk off’ to a ‘risk on’ switch by investors.
Derivatives are a high-risk form of investment as they use leverage to multiply the rate of return.
Derivative exchanges provide leveraging opportunities. Previous trends, like the ones marked in a ‘green’ circle, have indicated market bottoms. In the last instance, Bitcoin surged from the $4,000 mark to the $50,000 peak in 2021.
MRVR ratio
The MRVR ratio checks whether a particular coin is cheap (undervalued) or expensive (overvalued). When the ratio is in the red region, i.e., over 3.7, it is considered expensive, and when it is in the green area, i.e., below 1, it is considered cheap.
Analysts derive MRVR by dividing a coin’s market cap (market price) by its actual market cap.
The bitcoin MRVR ratio is at 1.07, just above the cheap region. The same instance is close to the market capitalization of Bitcoin (orange line), signaling an imminent bull run.
Net Unrealized Profit/Loss (NUPL)
Net Unrealized Profit/Loss (NUPL) is the average profit margin of all participants holding a particular coin. Similar to MRVR, it indicates whether the coin is cheap (undervalued) or expensive (overvalued).
According to CryptoQuant, previous data analysis, 70% profit margins (0.7) suggested market tops while levels -40% profit margin (-0.4) suggested market bottom.
The bitcoin NUPL ratio is close to the orange line (365 days moving average), which signifies the beginning of an uptrend.
Puell Multiple
Puell Multiple is a ratio of a coin’s daily issuance in USD to the 365-day moving average. Besides determining the coin’s pricing, it also indicates miner profitability and income stress.
The ratio indicates the coin is expensive (overvalued) when it is in the red area, i.e., above 4, and cheap (undervalued) when it is in the green area, i.e., below 0.5.
The Bitcoin Puell muller is just above the green area in the chart and has also crossed above the 365-day moving average, suggesting that it is in a bullish trend. The last time bitcoin made a similar move was in November 2020.
CryptoQuant PnL index
The CryptoQuant PnL index combines the NUPL, MVRV, and LTH/STH SOPR into a single indicator.
When the coin’s PnL index (dark purple line) crosses above the 365-day moving average (light purple line), analysts consider it bullish, triggering a buy signal. Analysts consider it bearish when it breaks below the moving average, triggering a sell signal. A PnL index above 1, i.e., in the red region, suggests that the coin traders have overvalued it, while when it is below -1.38, i.e., in the green area, it indicates that the coin is undervalued.
The Bitcoin PnL index is close to triggering a buy signal, which happens when it crosses above the 365-day moving average, i.e., when the dark purple line breaks above the light purple line.
