Definition. Measures the balance between profit-taking and loss-taking in on-chain spending, smoothed over two weeks and mapped to a four-state risk band.

Technical. The Realized Profit/Loss Ratio is smoothed with a 14-day moving average and compared to three fixed reference levels: 1 (equal profit and loss realised), 3 (75% of realised value in profit) and 9 (90% in profit). Very High Risk prints at or above 9, High Risk between 3 and 9, Low Risk between 1 and 3, and Very Low Risk at or below 1.

Interpretation. Ratios far above 1 mean spending is overwhelmingly profit-taking, which is characteristic of a market absorbing large sell-side volume near a local or cycle high. A ratio at or below 1 means loss-taking dominates, the signature of capitulation.