Indicator Overview

This indicator measures the Total Unrealised Profit held by all market participants, normalized against the Bitcoin Market Cap. This ratio is calculated by dividing the total dollar value of aggregate unrealised profit (the difference between the current price and the acquisition price of all profitable coins) by the total market capitalization. This normalisation provides a cycle-adjusted ratio that compares the amount of latent paper profit in the entire system to the total size of the network. It functions as a powerful, macro-level gauge of overall market euphoria and potential supply overhang.

How To Use

This ratio is a critical tool for identifying macro-cycle peaks and high-risk periods within the market. High readings (in the historical top zone) indicate that the aggregate unrealised profit accounts for a historically large fraction of the market cap. This signals maximum wealth and incentive for profit-taking across the entire market, typically marking major cycle tops as the profit overhang is vast and selling pressure is likely to follow. Conversely, low readings (near the bottom of the cyclical range) suggest holders possess little to no aggregate unrealised profit relative to the market size. This absence of a profit overhang is highly constructive and often occurs near favourable entry points or during accumulation phases where market-wide selling pressure from profitable holders is minimal.