TLDR
- RUPL series articles will be divided into 2 parts, this is the 2nd part
- This article will share how to analyze market tops by observing RUP and price trends simultaneously
- Following the above, this article will analyze each historical cyclical top using this method
- From the RUP perspective, share the current market stage
RUPL Simple Review
RUPL is the Relative Unrealized Profit and Loss, which can be broken down into RUP and RUL, representing Relative Unrealized Profit and Relative Unrealized Loss, respectively.
The main purpose of this data is to indicate the current overall market's profit and loss status.
For detailed explanation of the RUPL indicator, please refer to the previous post.
RUP's Top Escape Application
In this article, I will share a powerful use of RUPL in escaping tops, in which we only need to use RUP.
"When the RUP trend diverges from the BTC price trend, it highly likely indicates the appearance of a top"
A divergence is established when BTC price creates a higher high, but RUP creates a lower high.
The logic is that normally, when the price creates a higher high, RUP should follow.
But if the above divergence occurs (price is higher, but the market's profit status is lower), the only possibility is that "a large number of low-cost token holders have started selling their tokens and distributing".
Because in unrealized profits, low-cost tokens must occupy the largest proportion. Once they leave the market first, even if the price creates a new high later, since they have already left (a large amount of unrealized profit is converted to realized profit), RUP may not be able to create a new high with the price!
However, it is still necessary to remind that for market stage analysis and interpretation, a more accurate approach should be to combine other on-chain indicators for observation, so as to maximize avoiding the trap of drawing conclusions from limited information.
Detailed Analysis of Historical Cyclical Tops
After understanding the logic of RUP divergence, if we don't verify it in the market, it's all just empty talk.
Therefore, in this section, I will bring this logic and review BTC's historical cycle major tops with readers.
Bull Market Top in 2013
As shown in the image, the green line is RUP, and the black line is BTC price.
At the time of the top, there was a "three-stage divergence" between price and RUP.
As the price consecutively created two higher highs, the corresponding RUP created lower highs, completely satisfying the RUP divergence conditions we described earlier.
Bull Market Top in 2017
As shown in the image, a RUP divergence signal also appeared at the top in 2017.
In this top, RUP showed a divergence after the price reached its then highest point; subsequently, during the price's struggle and rebound, a second RUP divergence appeared, providing ample escape opportunities.
Two Tops in 2021
As shown in the image, we know that 2021 had a special "Double Top" structure, and I will analyze each top separately.
First, the first top was similar to 2013, with a "three-stage divergence"; then for the second top, similarly, a RUP divergence appeared during the top period.
So far, the three historical cycle tops that have occurred without exception could not escape the grasp of RUP divergence!
Of course, this doesn't mean that every top will necessarily have a RUP divergence, but based on current data, it has been without exception.
So, what about this cycle...?
Top Analysis for 2025
Without further ado, here's the chart:
(This data is from the time of writing, which was 2025/01/07)
At the time of writing, the price had already shown the first RUP divergence signal in this cycle, which is a warning that cannot be ignored.
Subsequently, on January 20, 2025, RUP again showed a three-stage divergence similar to the first top in 2013 and 2021, with BTC closing price around 106,000 that day.
I also posted apost on X, reminding everyone of the risk of a potential top.
Whether the top has been confirmed, I cannot tell, but I have indeed liquidated my BTC at an average price of 103k.
A top is a process, and whether my judgment is correct remains to be proven by time. Let's see.
Conclusion
This is the entire content of the Chain Data School (X) series,readers interested in learning more about on-chain data analysis should definitely follow this series of articles!
If you want to see more analysis and teaching content about on-chain data, welcome to follow my Twitter (X) account!
Hope this article helps you, thank you for reading.
