Definition. This chart shows the 7-day sum of Realized Profit (green columns, +ve) and Realized Loss (red columns, -ve), normalized by price to re-denominate the series in %ASSET% terms, together with their net balance (black line). These metrics, and their relative scale, can be used to better understand market cycles and investor sentiment.

Technical. The traces are rolling weekly sums of the USD realized metrics converted into native units:

• Realized Profit [Native] = sum(Realized Profit, 7) / Price 🟢
• Realized Loss [Native] = -1 x sum(Realized Loss, 7) / Price 🔴
• Net = Realized Profit [Native] + Realized Loss [Native] (black)

Denominating in native units removes the price component, so the series measure the volume of coins whose profit or loss is being realized — comparable across cycles regardless of price level.

Interpretation.

• Higher Values ↗️ signify a greater volume of Profit, or Loss, is realized, 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.

• The Net trace 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.

Notes. This video guide prepared by Glassnode is available to better understand the relationship between Realized Profit/Loss and Bitcoin market cycles. Built from Realized Profit and Realized Loss. The USD-denominated daily counterpart is Realized Profit and Loss [USD].