On-chain analysis reads Bitcoin's public blockchain data to gauge where we are in the market cycle. MVRV Z-Score, NUPL, Puell Multiple, Pi Cycle, and 3 more metrics explained — plus when to use them.
Bitcoin's blockchain is public. Every transaction, every wallet balance, every movement of coins is recorded and readable by anyone. On-chain analysis is the practice of reading that data to understand market conditions — who's buying, who's selling, how much profit holders are sitting on, and whether the market is overheated or oversold.
Unlike stock market technical analysis (which reads price charts), on-chain analysis reads the actual behavior of Bitcoin holders. It's one of the most powerful edge Bitcoin investors have — and almost no other asset class offers anything equivalent.
Here are the seven most useful on-chain metrics for long-term holders, explained plainly.
What it measures: How overvalued or undervalued Bitcoin is relative to its "fair value."
How it works:
When MVRV Z-Score is high (above 7), the average Bitcoin holder is sitting on massive unrealized gains — historically a reliable sign of market euphoria approaching a top. When it's low (below 0), the average holder is at a loss — historically the zone where long-term buyers accumulate.
In plain terms: A high MVRV Z-Score means "paper gains are enormous, euphoria is high, consider your exit plan." A low score means "many holders are underwater, this is historically when the smart money buys."
Historical signals:
MVRV Z-Score is available free at LookIntoBitcoin.com and Glassnode.com.
What it measures: The average cost basis of all Bitcoin currently in circulation.
How it works: Every Bitcoin is valued at the price it last moved on-chain. Sum all coins at their last-moved price, divide by supply. This gives the "aggregate cost basis" of the entire market.
The realized price currently sits around $40,000-70,000 depending on market conditions (exact figure changes constantly). When Bitcoin's spot price drops below the realized price, the average holder is underwater.
Why it matters for HODLers:
Variants: The MVRV ratio is simply current price ÷ realized price. An MVRV above 3.5 has historically preceded major corrections.
What it measures: The total unrealized profit (or loss) of the entire Bitcoin market, expressed as a percentage of market cap.
Formula: (Market Cap − Realized Cap) ÷ Market Cap
Why it matters: NUPL captures the aggregate emotional state of the market. When NUPL is very high (above 0.75), most holders are sitting on large gains — the "euphoria" zone where historically selling pressure peaks. When NUPL is deeply negative, the market is in "capitulation" — historically the best time to accumulate.
NUPL Zones:
| NUPL Value | Market Phase | Historical Pattern |
|---|---|---|
| Above 0.75 | Euphoria | Near cycle tops |
| 0.50–0.75 | Belief/Greed | Bull market, caution warranted |
| 0.25–0.50 | Optimism | Healthy bull market |
| 0–0.25 | Hope/Fear | Transition zones |
| Below 0 | Capitulation | Historical buy zones |
NUPL is a slower-moving signal than price. It's most useful for confirming major cycle tops and bottoms rather than short-term trading.
What it measures: Whether miners are being paid a lot or a little relative to historical norms.
How it works:
When the Puell Multiple is very high (above 4), miners are earning far above average — they're incentivized to sell to cover operating costs, creating selling pressure. When it's very low (below 0.5), miner revenue is depressed — miners who can't cover costs capitulate and sell, but the selling pressure is exhausted, creating a potential bottom signal.
Why it matters: Miner behavior is one of the most predictable market forces in Bitcoin. Miners have fixed electricity costs and must sell some Bitcoin consistently. Understanding when they're flush (and selling more) vs. stressed (and capitulating) gives insight into major supply/demand shifts.
The halving impact: Halvings cut miner revenue in half instantly — this is why Puell Multiple reliably drops at each halving and creates a period of miner stress. The resolution of that stress (price recovery or miner exit) has historically marked the beginning of new bull phases. With the 2028 halving approaching, this dynamic will play out again.
What it measures: A specific moving average crossover that has historically signaled Bitcoin cycle tops within days.
How it works:
Track record:
Important caveat: The Pi Cycle Top is a trailing indicator — it signals as Bitcoin reaches (or just passes) a peak, not before. You cannot use it to predict tops in advance. It's confirmation, not prediction. And a four-data-point track record is limited — it may not signal future tops with the same accuracy.
How to use it: Monitor it as one signal among several. When Pi Cycle approaches crossover AND other metrics (MVRV, NUPL) are in extreme territory, the weight of evidence for cycle peak risk increases.
What it measures: Bitcoin's scarcity relative to its annual new supply, compared to other scarce assets.
How it works:
After the 2024 halving, Bitcoin's S2F ratio is approximately 113 — comparable to gold (~60) and well above silver (~22). Bitcoin's S2F doubles with each halving.
Plan B's original S2F model (published 2019) suggested a price relationship: higher S2F → higher price, with Bitcoin predicted to reach $100,000+ after the 2020 halving. This broadly materialized, although timing and path varied significantly from the model.
The controversy: S2F is heavily debated. Critics argue:
How to use it: S2F is useful for understanding Bitcoin's improving scarcity position relative to gold and other stores of value. It's a poor short-term price predictor. Use it to understand the long-term fundamental case, not as a trading signal.
What it measures: The risk/reward of buying Bitcoin at current prices, based on how long holders have been holding.
How it works: Reserve Risk measures "confidence" — derived from the cumulative HODLing behavior of long-term holders — against current price. When price is high but HODLers haven't sold (high confidence but high price), Reserve Risk is high. When price is low but HODLers keep holding (high confidence, low price), Reserve Risk is low — historically a favorable risk/reward entry.
In practice: Reserve Risk is in a "buy zone" (below 0.002) during Bitcoin bear markets and post-capitulation phases. It enters "sell zone" territory (above 0.006) near cycle tops.
Why it matters: Reserve Risk incorporates holder behavior (not just price), making it complementary to price-only indicators. Long-term holders who refuse to sell despite low prices are voting with their coins on Bitcoin's long-term value — Reserve Risk quantifies that signal.
No single on-chain metric is perfectly reliable. Each measures a different aspect of market conditions. The power comes from convergence:
Bearish convergence (consider taking profits):
Bullish convergence (historically favorable accumulation):
This framework complements both our Bitcoin exit strategy guide (what to do when signals say "top") and the Bitcoin 4-year cycle strategy (positioning across the full cycle).
Free:
Paid:
For long-term HODLers, the free tools are entirely sufficient. Check LookIntoBitcoin once a month and compare the major indicators — it takes 10 minutes and gives you a meaningful read on where we are in the cycle.
On-chain analysis is a powerful edge — but it has real limits:
It doesn't predict macro shocks. The 2022 bear market was partly driven by Federal Reserve rate hikes and the Luna/FTX collapses — none of which were visible in on-chain data in advance.
Signals can remain extreme longer than expected. MVRV was "high" for extended periods during the 2020-2021 bull market before the top actually arrived. Premature exits based on high indicators have cost holders significant gains.
Exchange-held Bitcoin distorts readings. As more Bitcoin moves to ETFs and institutional custodians, on-chain flows change character. Some traditional signals may require recalibration.
On-chain analysis works best as one input in a broader strategy — alongside your portfolio allocation plan, exit strategy, and long-term holding conviction.
What is on-chain analysis? On-chain analysis is the study of Bitcoin blockchain data — transaction volumes, holder behavior, unrealized profits/losses, and miner activity — to understand market conditions. Because Bitcoin's ledger is public, this data is available to anyone.
Is on-chain analysis reliable? On-chain metrics have historically shown strong correlation with major Bitcoin cycle tops and bottoms. No metric is perfectly reliable, and past correlations don't guarantee future accuracy. They're most useful as confirmation signals during extreme market conditions.
What is the best on-chain indicator for timing Bitcoin? No single indicator is "best." MVRV Z-Score and NUPL are among the most widely trusted for cycle top/bottom identification. Using multiple indicators in convergence provides more reliable signals than relying on any one metric.
Where can I see Bitcoin on-chain data for free? LookIntoBitcoin.com and Glassnode.com both offer free tiers with all major indicators. Most long-term holders don't need paid subscriptions — the free data is sufficient for cycle monitoring.
Is on-chain analysis only for traders? No. Long-term HODLers benefit from on-chain analysis too — particularly for understanding when valuations are extreme (informing exit strategy) and when accumulation conditions are historically favorable (informing DCA intensity). Our Bitcoin DCA strategy incorporates on-chain signals for this purpose.
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