Definition. This chart shows the 7-day sum of Short-Term Holder Realized Profit (+ve, green columns) and Realized Loss (-ve, red columns), normalized by price to re-denominate the values in BTC terms, together with the Net Realized Profit/Loss (7D-EMA, blue line) and price (grey).

Technical. Both components use the entity-adjusted (account-based) STH realized profit and loss metrics:

• Relative 7-day STH Realized Profit [BTC] = sum(STH Realized Profit, 7) / Price (green)
• Relative 7-day STH Realized Loss [BTC] = -1 x sum(STH Realized Loss, 7) / Price (red)
• Net Relative Realized P/L = ema(Profit + Loss, 7) (blue)

Denominating in BTC removes the effect of a rising USD price, making realization volumes comparable across cycles.

Interpretation. These metrics, and their relative scale, can be used to better understand Bitcoin market cycles and investor sentiment:

• Higher Values ↗️ signify a greater volume of Profit, or Loss realized that day, usually peaking at market tops, and bottoms respectively.

• Lower Values ↘️ signify a relatively quiet period, often associated with longer-term price consolidation.

• Realized Profits 🟢 tend to dominate during bull markets, as investors who accumulated at cheaper prices, spend coins into market strength.

• Realized Losses 🔴 tend to dominate during bear markets, as investors who bought coins at higher prices, spend and exit at a loss, often peaking during capitulation events.

• Net Realized Profit/Loss 🔵 takes the difference between Realized Profit and Realized Loss to observe the net change in capital flows in/out of the asset.

💡 Hint: The transition between a bull and a bear market trend can often be identified, in part, by whether the volume of Realized Profits exceeds Realized Losses, and vice versa.

Short-Term Holders hold coins younger than 155 days, so their realization activity is the more reactive of the two cohorts — their cost basis sits close to the prevailing price, and local corrections and rallies flip this cohort between profit- and loss-taking quickly, making the chart a useful gauge of near-term sentiment.

Notes. This video guide prepared by Glassnode is available to better understand the relationship between Realized Profit/Loss and Bitcoin market cycles. The Long-Term Holder counterpart is Relative Long-Term Holder Realized Profit and Loss [BTC]. Built from STH Realized Profit and STH Realized Loss.