- The NUPL value has not dropped much despite the recent volatility.
- The short-term market sentiment was in favor of the sellers.
Ethereum [ETH] prices fell to the $2.2k support level once again after the recent slash in prices. The Bitcoin [BTC] selling pressure meant altcoins suffered too.
Yet, AMBCrypto noted that the NUPL metric showed optimism over the past two months.
The Net Unrealized Profit/Loss is defined as the difference between Relative Unrealized Profit and Relative Unrealized Loss. It has slowly climbed higher since October 2023.
Understanding the sentiment behind Ethereum
The NUPL reached 0.385 on the 11th of January. The last time that the NUPL of ETH was higher was back in May 2022, according to data from Glassnode.
Source: Glassnode
The Unrealized Profit or Unrealized Loss is calculated by weighting each circulating ETH by the difference between its current price and realized price.
Realized price refers to the price of the ETH when it was last moved.
Their difference has been useful in gauging the market cycle of Bitcoin and Ethereum in the past. Right now, the 0.385 value is a sign that the sentiment was optimistic in the macrocycle.
A look at the short-term sentiment showed the opposite. The Weighted Sentiment data from Santiment stood near zero to show social media engagement didn’t favor the bears or the bulls.
Source: Santiment
The Open Interest slid sharply on the 22nd and the 23rd of January, alongside the price of Ethereum. The OI had not yet recovered at press time.
The inference was that Futures participants preferred to remain sidelined as ETH traded near its $2.2k support zone.
The ETF approval caught many participants offside
After the 11th of January, ETH has trended downward on the lower timeframe price charts (such as the 1-hour chart). Yet, from the 12th to the 22nd of January, the estimated leverage ratio climbed higher.
Source: CryptoQuant
However, it fell rapidly from 22nd to 24th January as prices nosedived.
This suggested that, while a good portion of speculators chose to remain sidelined (OI was falling slowly at that time) a large number also sought to increase leverage in the hopes of catching a breakout upward.
Source: Hyblock
AMBCrypto analyzed the estimated liquidation levels of ETH and found that the $2.3k mark was important yet again.
The Cumulative Liq Levels Delta was negative, meaning that short liquidations outweighed the long ones.
Hence, there is a better chance of a bounce in prices to liquidate these short sellers, than a bearish continuation over the next few days.
Read Ethereum’s [ETH] Price Prediction 2024-25
To the north, the $2310 level had close to $100 million in estimated liquidations. Many smaller liquidation levels were clustered around the $2.3k mark.
Therefore, a bounce to the $2310-$2350 area has a good likelihood. Whether Ethereum will face a rejection from there or a bullish recovery remains to be seen.