Original Article Title: "On-Chain Data School (Part 10): Market Thermometer RUPL (II) - Strongest Top Signal & Detailed Analysis of Historical Cycle Tops"

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

This article is the 10th in the On-Chain Data School series, with a total of 10 articles. It takes 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 9): Market Thermometer RUPL(I) Data Introduction & Bottom Fishing Application"

You may not know, but there is a never-failing top signal in historical cycles that is currently brewing...

TLDR

- The RUPL series of articles is divided into two parts, this is the 2nd part  

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

- Furthermore, this article will use the above method to analyze the top of each cyclical cycle  

- From the perspective of RUP, the market is currently at a position very close to the top

1. RUPL Brief Review  

RUPL stands for Relative Unrealized Profit/Loss, which can be divided into RUP and RUL, representing relative unrealized profit and relative unrealized loss, respectively. The primary use of this data is to indicate the overall profit/loss situation of the current market. For a detailed explanation of the RUPL indicator, please refer to the previous article: "On-Chain Data School (Part 9): Market Thermometer RUPL(I) Data Introduction & Bottom Fishing Application"

2. RUPL Escape Top Application  

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

When RUP deviates from the $BTC price trend, it often indicates a potential top

1. More precisely, when the $BTC price sets a higher high but RUP sets a lower high, a deviation is confirmed.

2. The rationale behind this is:

As mentioned in the previous article, RUP calculation first requires summing up the Unrealized Profit in the market. The Unrealized Profit of large chip holders is significantly higher than that of small chip holders. In theory, when the price sets a higher high, RUP should also rise. However, if the aforementioned deviation occurs (higher price with lower market profit), the only possible explanation is that "holders of large amounts of chips have started to sell off chips, initiating distribution."

3. This logic is similar to Realized Profit and can be used as a cross-validation reference. For more information on Realized Profit, please refer to the following article: "Chain Data School (III): Have the Bottom-fishing Market Makers Made a Profit?"

The above is an explanation of "Why RUP Deviation Can Be Used as a Top Signal," but it is essential to note: The most accurate way to assess market phases is to combine other on-chain indicators for observation in order to avoid the misconception of "looking through a tube".

III. Detailed Analysis of Historical Cycle Tops  

Having understood the logic behind RUP deviation, it is merely theoretical without practical validation. Therefore, in this section, I will take everyone through a review of historical tops of $BTC:

2013 Bull Market Top

As shown in the above chart, the green line represents RUP, and the black line represents BTC price. At the top, a "three-stage deviation" occurred between the price and RUP. As the price continuously set two higher highs, the corresponding RUP continuously set lower highs, perfectly matching the previously described RUP deviation top signal.

2017 Bull Market Top

As shown in the chart, during the 2017 top, an RUP divergence signal also appeared. At this top, RUP showed a divergence when the price reached its highest point. Subsequently, as the price struggled to rebound, a second divergence appeared, providing a clear opportunity to exit the market.

2021 Bull Market Top

In 2021, a rather unique "double top structure" emerged. I have analyzed each of the two tops separately. In the first top, a situation similar to 2013 occurred, with a "three-phase divergence"; in the second top, once again, an RUP divergence occurred at the peak.

Thus far, all three historically significant cycle tops have exhibited an RUP divergence without exception. Of course, this does not mean that every future top will definitely show a divergence, but based on current data, every top so far has followed this pattern. What about this current cycle top?

IV. Potential Top in 2025: Current Market Stage Analysis  

Let's jump straight to the chart:

It can be seen that in this current cycle, a "single" RUP divergence top signal has already appeared. By combining the content of the Top Escape Weekly Report, or by analyzing data from URPD, Cointime Price, Realized Profit, and other sources, one can more or less detect some signs of a top.

A slightly optimistic note is that based on the previous three tops, except for the second top in 2021, the first tops of 2013, 2017, and 2021 have each shown at least two divergences, whereas currently, only one has occurred.

Therefore, following historical patterns, if the short-term $BTC price hits a new high again, there is a high probability of a three-phase divergence similar to the first tops of 2013 and 2021. At that point, it will undoubtedly be a crucial exit opportunity for all readers to focus on

Additional 1: Refer to the latest data chart in the comments section  

Additional 2: References to mentioned data  

- Cointime Price Series (three articles in total, see links for reference): "On-Chain Data School (VIII): A Brand New, Ark-Involved BTC Magical Pricing Methodology (III)"

- URPD Introduction: "On-Chain Data School (Part IV): Visualizing BTC's URPD Price Distribution Map"

Original Article Link

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