Bitcoin Realized HODL Ratio

  1. Market Value to Realized Value Ratio by David Puell and Murad Mahmudov.
  2. HODL Waves by Unchained Capital.
  1. Market Value: Also known as market capitalization, to calculate it you would multiply current BTCUSD trading price by the number of bitcoins mined thus far. Very much like Market Cap in traditional markets where one multiplies the share price by number of shares for a given company.
  2. Realized Value: Instead of counting all of the mined coins at equal current price, the UTXOs are aggregated and assigned a price based on the BTCUSD market price at the time when said UTXOs last moved from one wallet to another wallet. It can be thought of as the cost basis for coins currently held.
  3. HODL Waves: Groups UTXO’s by age since they were last moved. When these different groups by age are charted, they look like waves. Hence the term HODL waves.

Introducing Realized HODL (RHODL) Ratio

This new indicator aims to identify extremes in market psychology over time to accurately identify Bitcoin global cycle highs and lows.

Global cycle tops for $BTC price are identified by RHODL Ratio (blue line) breaching the overbought zone (pink band).
Realized value and Bitcoin halvings
  1. No ‘false’ signal in 2013:
RHODL Ratio called the 2017 top 3 days before the market topped. In 2014 it called the market top to the exact day.
MVRV downward drift over time of upper threshold

Some caveats

  1. Market Cycles: Realized HODL Ratio uses it’s 1–2yr HODL period as a base time period to compare short term activity against. Therefore it relies on Bitcoin continuing to grow in a broadly consistent manner over time. While this is likely for the next 3-5 years due to halving effects and adoption rates, nothing is guaranteed.
  2. Market Structure: It is likely that market cap volatility will decrease over time, which will impact Realized HODL Ratio’s ability to signal tops. As with other indicators, it may struggle to signal a market top should we see prolonged drops in volatility and rounded tops in Bitcoin’s price structure in the future.

Where are we now and live data chart

Currently, RHODL Ratio is indicating that we are in the early stages of a bull market having moved out of the green accumulation band. Current RHODL ratio levels are comparable with early bull market stages of 2013 and 2016.

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Philip Swift (@PositiveCrypto)

Philip Swift (@PositiveCrypto)

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Crypto Trader and Investor. Market Cycles + Blockchain Analysis + Market Psychology. Follow me on Twitter for my analysis @positivecrypto