Indicator Overview

This indicator measures the Total Unrealised Loss held by all market participants, normalized against the Bitcoin Market Cap. This ratio is calculated by taking the aggregate dollar value of unrealised losses (the difference between the acquisition price and the current price for all underwater coins) and dividing it by the total market capitalization. This normalisation provides a cycle-adjusted ratio that compares the amount of latent selling risk from holding losses to the total size of the network. It functions as a powerful, macro-level gauge of overall market financial stress.

How To Use

This ratio is a critical tool for identifying macro-cycle bottoms and maximum financial pain. High readings (in the historical bottom zone) indicate that the aggregate unrealised losses account for a historically large fraction of the market cap. This signals extreme market-wide financial pain and fear, which often precedes major market bottoms as it represents the peak of capitulation. Conversely, low readings (near the bottom of the cyclical range, approaching zero) indicate minimal unrealised losses across the network. This suggests the market is highly profitable and lacks the typical selling pressure associated with investors being underwater. Low readings are usually found during strong uptrends and are generally bullish for continuation.