On-chain signals: flows, whales, MVRV and NUPL

Beyond the basics, analysts watch a set of indicators that try to gauge market behaviour and valuation. Use them as lenses, not as crystal balls.

Exchange flows

Tracking coins moving into and out of exchanges is a popular behavioural signal:

• Large inflows to exchanges are sometimes read as intent to sell (coins moved to where they can be sold).
• Large outflows from exchanges are sometimes read as intent to hold in self-custody.

These are tendencies, not certainties — flows can have many explanations.

Whale tracking

A whale is an address holding a very large amount of a coin. Because the ledger is public, analysts watch whale wallets, since a single large holder's moves can affect a market. The limits from the previous lesson apply: an address is not necessarily one person, and watching whales can mislead as easily as inform.

Valuation metrics: MVRV and NUPL

Two widely cited metrics attempt to judge whether the market is cheap or expensive:

• MVRV (Market Value to Realised Value) compares the current market value of all coins to their realised value — roughly, the aggregate price at which each coin last moved. A high MVRV suggests holders are sitting on large unrealised gains (historically associated with frothy tops); a low one the opposite.
• NUPL (Net Unrealised Profit/Loss) estimates whether the market as a whole is in unrealised profit or loss, used to gauge sentiment phases from capitulation to euphoria.

The essential disclaimer

These metrics are descriptive models built on assumptions, and they have been wrong. They can frame where the market may be in a cycle, but they do not forecast price and should never be the sole basis of a decision. Combine them with broad skepticism and never with money you cannot afford to lose.