Original Title: "On-chain Data Academy (10): Market Barometer RUPL (II) - The Strongest Top Signal & Detailed Analysis of Historical Cycle Tops"

Original author: Mr. Beg, on-chain data analyst

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 in understanding on-chain data analysis. Interested readers are welcome to follow this series of articles.

Related Reading: "On-Chain Data Academy (Nine): Market Barometer RUPL(I) Data Introduction & Bottom Fishing Application"

You might not know that there is a top signal that has never missed in historical cycles, and it is currently brewing...

TLDR

• The RUPL series of articles is divided into two parts, this is the second part.

• This article will share how to analyze market tops by simultaneously observing RUP and price trends.

• Continuing from above, this article will analyze the peaks of each periodic cycle using the methods mentioned.

• From the perspective of RUP, the market is currently very close to the top position

1. RUPL Simple Review

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. The main purpose of this data is to indicate the overall profit and loss status of the current market. For a detailed explanation of the RUPL indicator, you can refer to the previous article: "On-chain Data Academy (9): Market Barometer RUPL(I) Data Introduction & Bottom Fishing Application"

2. The Top Escape Application of RUPL

As mentioned in the conclusion of the previous article, in today's article, I will share a powerful use of RUPL in escaping the peak. In this use case, we only need to use RUP and temporarily do not need to consider RUL:

When RUP diverges from the price trend of $BTC, it is likely to indicate a top has formed

1. To be precise, when the $BTC price reaches a higher high, but the RUP creates a lower high, a divergence is established.

2. Its logic lies in:

As mentioned in the previous article, the calculation of RUP needs to first add up the Unrealized Profit in the market. The Unrealized Profit of a large number of chip holders is much higher than that of a small number of chip holders, and it stands to reason that when the price makes a higher high, the RUP should also go up. However, if there is such a divergence (the higher the price and the lower profitability of the market), then the only possibility is that the holder with a large amount of chips has already started to sell and distribute the chips.

3. This logic is similar to Realized Profit and can serve as a reference for cross-validation. For an introduction to Realized Profit, you can refer to the following article: "On-Chain Data Academy (3): Have the bottom-acquiring institutions realized their profits?"

The above is the logical explanation for "why RUP divergence can serve as a top signal". However, it is important to note when using it: For market stage assessment, the most accurate approach should be to observe it together with other on-chain indicators, in order to avoid the misconception of "seeing the sky through a tube" to the greatest extent.

3. Detailed Analysis of Historical Cycle Tops

After understanding the logic of RUP divergence, if we don't actually verify it, it's all just theoretical discussions. So in this part, I will take everyone through the historical peaks of $BTC:

2013 Bull Market Peak

As shown in the chart above, the green line is RUP and the black line is the BTC price. When the top occurs, there is a "three-stage divergence" between the price and the RUP, as the price makes two consecutive higher highs, the corresponding RUP makes successive lower highs, which is fully consistent with the RUP divergence top signal described earlier

2017 Bull Market Peak

As shown in the figure, a divergence signal of RUP also appeared at the peak in 2017. In this peak, RUP showed a divergence when the price reached its highest point; then, during the price's struggle to rebound, a second divergence appeared, providing a sufficient opportunity to escape.

2021 Bull Market Peak

As shown in the figure, a relatively special "double top structure" appeared in 2021. I will analyze the two tops separately. The first top is similar to the situation in 2013, showing a "three-stage divergence"; the second top also exhibited an RUP divergence at the top period.

So far, in the three historical cycle tops that have occurred, without exception, RUP divergence has appeared. Of course, this does not mean that every future top will necessarily show divergence, but based on the current data, each time has been no exception. So... what about this round?

IV. Potential Top in 2025: Analysis of the Current Market Stage

Here is the image directly:

It can be seen that in this round of cycles, a "once" RUP divergence top signal has already appeared. Combined with the content of the escape top weekly report, or from data such as URPD, Cointime Price, and Realized Profit, one can actually find some signs of a top appearing, more or less.

A slight cause for optimism is: except for the second peak in 2021, the first peaks in 2013, 2017, and 2021 have all shown at least two instances of divergence, while currently, only one instance has appeared.

Therefore, based on historical patterns, if the $BTC price hits a new high in the short term, there is a high probability that a three-stage divergence similar to the first peaks of 2013 and 2021 will occur. At that time, it will undoubtedly be an opportunity for all readers to pay close attention to exit the market.

Supplement 1: You can refer to the latest data chart in the comment section.

Supplement 2: Relevant information mentioned in the text

• Cointime Price Series (three articles in total, see references in the link): "On-Chain Data Academy (8): A Brand New BTC Pricing Methodology Co-researched by Ark (III)"

• URPD Introduction: "On-chain Data Academy (Part Four): Visualized BTC Chip Price Distribution Chart"

Original link

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