This article is the 10th in the on-chain data school series, with a total of 10 articles. It will guide you step by step to understand on-chain data analysis, and interested readers are welcome to follow this series.
Related reading: 《On-chain Data School (Nine): Market Barometer RUPL(I) Data Introduction & Buy the Dips Application》
You might not know that there is a top signal that has never failed in historical cycles, and it is currently fermenting...
TLDR
- RUPL series articles are divided into two parts, this is the 2nd part
- This article will share how to analyze market tops by simultaneously observing RUP and price trends
- Building on the above, this article will analyze the top of each cyclical period
- From the RUP perspective, the market has now come to a position very close to the top
I. Simple Review of RUPL
RUPL is the relative unrealized profit and loss, which can be split into RUP and RUL, representing relative unrealized profit and relative unrealized loss, respectively. Its main purpose is to indicate the current overall market profit and loss status. For detailed explanation of the RUPL indicator, please refer to the previous article: 《On-chain Data School (Nine): Market Barometer RUPL(I) Data Introduction & Buy the Dips Application》
II. Top Escape Application of RUPL
As mentioned in the conclusion of the previous article, today I will share a powerful use of RUPL in escaping tops. In this method, we only need to use RUP and temporarily do not need to consider RUL:
When RUP and $BTC price trends show divergence, it likely means a top has appeared
1. Precisely, when $BTC price creates a higher high, but RUP creates a lower high, the divergence is established.
2. The logic is:
The previous article mentioned that RUP calculation requires first totaling the market's Unrealized Profit. Large token holders' Unrealized Profit is far higher than small token holders'. Theoretically, when the price creates a higher high, RUP should also rise. But if the above divergence occurs (price is higher, but the market's profit state is lower), the only possibility is that "large token holders have started selling tokens and distributing".
3. This logic is similar to Realized Profit and can be used as a cross-validation reference. For an introduction to Realized Profit, please refer to the article: 《On-chain Data School (Three): Have the whales who absorbed at the bottom realized their profits?》
The above explains the logic of "why RUP divergence can be a top signal". However, when using it, still note: for judging market stages, the most correct approach should be to observe together with other on-chain indicators to maximize avoiding the "peeping through a tube" fallacy.
III. Detailed Analysis of Historical Cycle Tops
After understanding the logic of RUP divergence, if not actually verified, it's all just empty talk. So in this section, I will review the historical tops of $BTC:
2013 Bull Market Top
As shown in the image, the green line is RUP, and the black line is BTC price. At the top, price and RUP showed a "three-stage divergence", as the price consecutively created two higher highs, the corresponding RUP created lower highs, completely matching the RUP divergence top signal described earlier
2017 Bull Market Top
As shown, at the 2017 top, the RUP divergence signal also appeared. In this top, RUP showed one RUP divergence when the price reached its highest point; then another divergence appeared when the price struggled to rebound, giving ample escape opportunities
2021 Bull Market Top
As shown, 2021 presented a special "Double Top" structure. I analyzed each top separately. The first top was similar to 2013, showing a "three-stage divergence"; the second top also showed an RUP divergence during the top period.
Above are the three historical cycle tops that have occurred, without exception, all showing RUP divergence. Of course, this doesn't mean that every future top will show divergence, but based on current data, it has never failed. So... what about this cycle?
IV. Potential 2025 Top: Current Market Stage Analysis
Here's the direct image:
You can see that in this cycle, a "first" RUP divergence top signal has already appeared. Combining the top escape weekly report, or from URPD, Cointime Price, Realized Profit and other data, signs of a top can actually be found more or less.
Slightly optimistically: according to the first three tops, except for the second top in 2021, the first tops in 2013, 2017, and 2021 all had at least two divergences, while currently only one has appeared.
Therefore, according to historical patterns, if $BTC price creates a new high in the short term, there is a very high probability of a three-stage divergence similar to the first tops in 2013 and 2021. At that time, it will undoubtedly be a top escape opportunity worth all readers' attention
Supplement 1: Current latest data chart can be referenced in the comments section
Supplement 2: Related materials mentioned in the text
- Cointime Price series (three articles, see links within): 《On-chain Data School (Eight): A Brand New BTC Pricing Methodology Researched by Ark (III)》
- URPD Introduction: 《On-chain Data School (Four): Visualized BTC Chip Price Distribution Map》
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