Bitcoin Relative Unrealized Profit/Loss is an indicator specialized on the criptomoneda. Helps the investor to identify when to take profits and when to re-enter the market. Tuur demeester score and Michiel Lescrauwaet created this tool with the intention of obtaining more information about the supply current that is in profits or losses. In this way, Bitcoin Relative Unrealized Profit/Loss takes into account the real value in Fiat (USD), by which a Bitcoin is in the profits / losses.
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How do I get Bitcoin Relative Unrealized Profit/Loss?
This indicator is derived from the market value and the value achieved. Therefore, it is necessary to know the meaning of each of these two terms. Market value: the current price of Bitcoin multiplied by the number of coins in circulation. This is what we usually know as the market capitalization, or market capital. In traditional markets, is the stock price multiplied by the number of shares. Value done: take the price of each Bitcoin when they moved for the last time. This is, as a photo of the instant of the price of the Bitcoin when it was moved for the last time from a wallet to another. Subsequently, we add up all these individual prices and determines an average price. Then, multiply that average price by the total number of coins in circulation. If we subtract the value of the market value, we obtain the gain/loss unrealized. In this way, with Bitcoin Unrealized Profit/Loss, we can estimate the total gain/loss on Bitcoin. Likewise, if we divide the gains / losses unrealized by the market capitalization, we can identify how changes relatively over time. Mathematically speaking, the unrealized gain (UP) and the unrealised loss (UL) is defined as: This creates a gain / relative loss is not performed, which is very useful to track the sentiment of investors over time for Bitcoin. And you can see it in the following way. Unrealised Profit and Unrealised Loss of Bitcoin, allow to measure the gains or losses of investors according to the price at the time. Making a relationship between the two metrics, we obtain Bitcoin Relative Unrealized Profit/Loss. And you can see in the following graph superimposed on the price of Bitcoin. Relative Unrealised Profit/Loss of Bitcoin, it is used as an indicator of market sentiment.
What tells us this metric?
Bitcoin Relative Unrealized Profit/Loss reflects how much of the supply of circulating Bitcoin has gains or losses in a given point. By what can be interpreted as an indicator of investor sentiment. Has as a key principle, the relationship between the market capitalization and investors who profit with Bitcoin. In this way, when the market capitalization increases much faster than the take profit, we see that the market is overheating. In these areas indicated by the red band, is when they have been historically favorable for a profit for investors. Especially for those who have taken a position within the area indicated in green and exit the market in the area of the red stripe. At current prices and with the activity of the market, Relative Unrealized Profit/Loss of Bitcoin is hovering on the white strip.