Realized Price

Realized Price Indicator

The Realized Price is an on-chain metric that represents the average price at which all coins in the circulating supply were last transacted. It provides insights into market valuation, holder behavior, and key support or resistance levels. This metric is widely used to assess market sentiment and identify undervaluation or overvaluation phases.

Steps to Use the Realized Price Metric

1. Understand the Concept

• Realized Price: Calculated as the ratio of the Realized Cap to the total circulating supply:

• Realized Cap: The aggregate value of UTXOs at their acquisition prices.

• Relevance: Reflects the average acquisition cost of all coins, offering insights into the price levels at which market participants are collectively in profit or loss.

2. Interpret the Realized Price Metric

• Market Price > Realized Price: Indicates that the majority of coins are in profit, often observed during bull markets and periods of strong demand.

• Market Price < Realized Price: Suggests that the majority of coins are at a loss, typically seen during bear markets and capitulation phases.

• Market Price ≈ Realized Price: Reflects market equilibrium, often observed during consolidation or accumulation phases.

3. Analyze Historical Patterns

• Bull Markets: The market price often stays well above the Realized Price, reflecting widespread profitability and bullish sentiment.

• Bear Markets: The market price frequently drops below the Realized Price, signaling capitulation and undervaluation.

• Accumulation Phases: Market price hovering near the Realized Price indicates strategic buying by long-term holders and market stabilization.

4. Make Decisions

• During Bull Markets: Use the Realized Price as a key support level, indicating areas where buyers historically step in to maintain upward momentum.

• During Bear Markets: Monitor when the market price crosses above the Realized Price, signaling potential recovery and bullish sentiment.

• During Consolidation Phases: Observe the Realized Price as an equilibrium level, providing a baseline for market valuation and accumulation opportunities.

Tips:

• Combine with Other Metrics:

Use Realized Price alongside metrics like Market Price, MVRV Ratio, and Realized Cap for a comprehensive view of market valuation and sentiment.

• Identify Undervaluation Zones:

When the market price is below the Realized Price, it often indicates undervaluation and strategic buying opportunities.

• Compare Historical Trends:

Analyze how the Realized Price has behaved in previous market cycles to identify recurring patterns and align strategies with historical data.

• Track Profitability:

Realized Price helps assess the overall profitability of the network by comparing the current market price to the average acquisition price.

• Monitor Key Levels:

Use Realized Price as a dynamic support or resistance level to evaluate potential price movements and market turning points.

How to Use the Indicator Effectively

• During Market Tops: If the market price deviates significantly above the Realized Price, it indicates potential overvaluation and heightened risk of corrections.

• During Market Bottoms: When the market price is below the Realized Price, it reflects undervaluation and potential accumulation phases.

• During Consolidation Phases: The market price near the Realized Price suggests equilibrium, providing a stable foundation for long-term planning and investment strategies.

Created By: Antoine Le Calvez