This chart presents a ratio between the Realized Profit/Loss Ratio, and its 1yr moving average. This tool provides a view of periods where the Profit/Loss Ratio is experiencing acceleration in either direction, aiding in identification of trend inflection points.

Realized Profit/Loss Momentum is calculated as follows:

Realized P/L Ratio = Realized Profit / Realized Loss

P/L Ratio Momentum = sma(Realized P/L Ratio,7)/sma(Realized P/L Ratio,365)

This metric highlights periods where investors are particularly active throughout the market cycle, and when a regime shift is taking place between profit / loss dominance.

• Owners of recently transacted or acquired coins are likely to carry a degree of recency bias with respect to the coins cost basis. Thus price rising, or falling below that level is more likely to elicit a response.

• Around local market extremes, there is often a net transfer of wealth, as investors take profits near tops, or capitulate near bottoms. This rotation of capital usually leads to an increase in the proportion of wealth held by inexperienced holders.

Tracking the momentum shifts for realized profit/loss can signal when macro market trends are at an inflection point.

• 🟢 Realized Profit accelerates during market rallies, as investors that acquired coins recently come into profit.

• 🔴 Realized Loss accelerates during market corrections, which plunge holders that acquired coins into a loss, creating panic.