Original Article Title: "On-chain Data School (Part 4): Visualizing the $BTC Chip Price Distribution Map"

Original Article Author: Mr. Berg, On-chain Data Analyst

This is the 4th article in the On-chain Data School series, with a total of 10 articles. Take you step by step to understand on-chain data analysis. Interested readers are welcome to follow this series of articles.

Related Reading: "On-chain Data School (Part 3): Have the Bottom Fishing Whales Taken Profit?"

TLDR  

- This article will focus on introducing the URPD on-chain metric.  

- URPD shows the distribution of $BTC chips at different holding costs.  

- URPD can be used to observe chip turnover, distribution status, and provide guidance on trends.  

What is URPD?

URPD stands for UTXO Realized Price Distribution.

Due to BTC's unique UTXO blockchain structure,

we can track data on-chain that is unavailable in traditional financial markets.

The URPD chart is an indicator derived from this principle,

where we can see the number of chips corresponding to each price level on the chart,

equivalent to showing the "buying cost per $BTC."

URPD, Chip Turnover, Accumulation, and Distribution  

Once we understand the concept of URPD,

we can then observe the turnover of chips at different price levels based on daily URPD changes.

For example:  

The first image is the URPD chart for May 1,

and the second image is the URPD chart for October 1.

After undergoing five months of wide-ranging fluctuations in price,

It is evident that a phenomenon of low-cost chips being distributed upwards.

URPD, Chip Turnover, Accumulation, and Distribution (2)

Historically, at market tops, there has often been a culmination of profitable low-cost chips being distributed as the trend nears its end;  

while at market bottoms, a large number of chips can be seen accumulating in a relatively narrow range.

Therefore, in analysis,

URPD can often be observed together with other data (such as realized profits, MVRV, etc.),

integrate thinking logic, and understand the market from a more comprehensive perspective.

Support, Resistance, Consensus 

When a significant number of chips start to accumulate in a single price range,

it indicates that a consensus of supply and demand has gradually formed in that range.

Once the price subsequently rapidly moves up and out of that range,

due to the high turnover of chips in that range,

it is likely to provide support in the future;

Conversely, if the price drops below that range,

the chips in that range will become trapped chips,

which may act as resistance levels in the future when the price rises.

Original Article Link

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