This chart shows the 7-day sum of Realized Profit (+ve) and Realized Loss (-ve), normalized by price to re denominate in %ASSET% terms. 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 are 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.
This video guide prepared by Glassnode is available to better understand the relationship between Realized Profit/Loss, and Bitcoin market cycles.