An Analysis of the 16 Nov Market Sell Off From the Perspective of Network Profit Loss
The network profit loss (NPL) indicator (brown line above) by Santiment is a very interesting one that I’ve just discovered. I really recommend reading this article to get a sense of what it is. Basically, network profit loss indicates to us whether most people are taking profits or losses from their trades at any single moment. If the mechanics behind this indicator is sound1, it is truly a novel indicator of Defi. NPL is derived by taking every coin on the blockchain and making the assumption that the price at which it last moved is its acquisition price, and the price at which its currently transacted at is its ‘sell’ price - therefore deriving the ROI. From the ROI, we get a rolling image of overall ’network’ profitability. ...