NUPL-MVRV Harmonic Composite

SQL of the Week 020

Where has the Bitcoin bear market historically ended?

NUPL-MVRV Harmonic Composite is an index that combines the two most well-known market cycle indicators into a single number.

NUPL and MVRV separately speak to the same thing: how far the current price has diverged from the real value of the coins on the network. But each has its own weaknesses. NUPL is sensitive to the volume of unrealized profit, MVRV to the ratio of market capitalization to realized capitalization. The harmonic mean combines them so that neither dominates the other.

The main idea: one indicator can be ignored, two synchronous ones cannot. When both simultaneously move into negative territory, it reflects a structural market state that has occurred only four times in 14 years of observations.