Spotting weak hand capitulation (feat. SAND)

There's been a lot of talk about Sandbox (SAND) today due to the coin breaking new ATH, so I took a closer look at its metrics and spotted this beauty:

See that massive Network Profit/Loss dip in early November, which coincided with its price bottom?

We see this every so often with low and mid-cap assets, signaling that the coins being transferred on-chain are moving at significant loss relative to the last time they changed addresses. In other words, pointing to network-wide capitulation.

Here’s how NPL works: for each unit of a coin that moves on the blockchain, we take the price at which it last moved and assume this to be its acquisition price. Once it changes addresses again, we assume this to be its sell price. Because of this, dips in a coin’s NPL suggest that the coins currently moving on the blockchain are - on average - being moved (or ‘sold’) at relative loss, and vice versa.

This seems to be a common 'maximum pain' marker - those that bought during the rally start panic dumping because they fear further downtrend. Assuming there's enough dip-buying pressure, these 'weak hand' capitulation events can sometimes mark a directional change in the coin's PA.

And it's not the only example- zooming out a bit, we see another sizable dip in SAND's Network Profit/Loss right around the June bottom, marking the beginning of price recovery for the SAND token:

Although it makes some assumptions, NPL can be a very helpful gauge of present investor sentiment and how holders are responding to periods of price volatility. You can find the Network Realized Profit/Loss metric for any coin (that we provide on-chain data for) under On-chain -> Network Value. Stay safe out there.