On-chain data analyst Axel Adler Jr. announced on March 7 that the NUPL-MVRV Harmonic Composite index for Bitcoin reached the 0.33 level. Adler notes that this level reflects the middle phase of the current cycle in the market. In past cycles, market bottoms were generally visible at minus 0.50 levels. The current level is well above previous bear market bottoms.
Structure and Meaning of the Index
The NUPL-MVRV Harmonic Composite index is obtained by combining two on-chain metrics. The first of these, NUPL (Net Unrealized Profit and Loss), measures the total unrealized profit or loss of Bitcoin investors based on market value. MVRV, on the other hand, compares the current market value of Bitcoin to the collective cost of all coins in circulation. Blending the two indicators enables a more stable and healthy market cycle analysis.
In the chart, the composite index is shown in orange and red colors. Above 0.8 represents the region where cycle peaks have been seen in the past. Pink areas below zero correspond to historical cycle bottoms. The black curve follows the Bitcoin price on a logarithmic scale.
Bitcoin is in the middle phase of the market cycle, indicated by the NUPL-MVRV Harmonic Composite index reaching the 0.33 level. Past cycle bottoms have generally occurred around minus 0.50. It is also observed in the chart that the cycle bottoms have started to shift upward over the years. This indicates that the sharp declines seen in market crashes are gradually decreasing.
Uptrend at Cycle Bottoms
According to the data, the bottom in 2015 was recorded as the deepest in the negative zone. In the 2019 correction, the bottom did not go this low. Although the market bottom observed in 2022 fell to negative 0.50 levels, it was seen to be lighter compared to previous years. It is noteworthy that as time progresses, the recoveries experienced in each new cycle become less severe.
If this trend continues, it is considered that the next market bottom may occur before reaching the negative 0.50 region. For investors, this may require interpreting signals of extreme fear differently than in the past. A bearish bottom forming at negative 0.20 could still indicate a significant cycle bottom.
Current Level and Loop Position
The index being at 0.33 corresponds to a point midway between the neutral line and the past peak area of 0.80. This shows that the market is still recovering from lows, but is not approaching the final phase of previous bull seasons. The current indicator points to an intermediate phase in which balance is achieved.
Analyst Adler noted that a signal of complete market capitulation has not yet been confirmed, but the index also does not indicate a peak. The mid-stage position coincides with the period when the effect of the previous correction in the market has diminished and a new direction is being sought.
