Indicator Overview

The Realised Profit/Loss Ratio is a high-fidelity oscillator that measures the total dollar value of Bitcoin moved in profit relative to the total dollar value of Bitcoin moved at a loss. By calculating the ratio of Realised Profit to Realised Loss (both smoothed by a 14-day EMA), this metric serves as a direct window into market sentiment and capital flows.

A ratio of 1.0 represents the equilibrium point. When the line is above 1.0, the market is in a net-profit regime, typically seen during sustainable uptrends. When the line falls below 1.0, it indicates that the dollar value of losses being realised exceeds the profits, a classic sign of market capitulation and fear. The area-fill design mirrors this shift, turning green during profitable expansion and red during periods of structural weakness.

How To Use

Investors can use this ratio to identify shifts in market dominance between profit-takers and panic-sellers, providing a clear signal for macro cycle transitions.

• Regime Shifts (The 1.0 Line): The most critical signal occurs when the ratio crosses the 1.0 threshold.

  • Bullish Flip: Crossing above 1.0 after a long period of red indicates that the market has absorbed the selling pressure and is entering a new phase of profitability.

  • Capitulation Signal: Dropping below 1.0 signals that the market is realising more losses than profits, often marking the exhaustion phase of a correction or the terminal stage of a bear market.

• EMA Smoothing (14-Day): The 14-day Exponential Moving Average removes daily noise while remaining responsive enough to catch rapid shifts in trend. This makes the indicator highly effective for identifying "mid-curve" pullbacks versus true trend reversals.

• Logarithmic Scaling: The metric is displayed on a log scale so that a move to 0.5 (where losses are 2x profits) is visually proportionate to a move to 2.0 (where profits are 2x losses), providing an undistorted view of historical extremes.