On-Chain Data School (1): Do You Know the Average BTC Cost Across the Entire Market?
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On-Chain Data School (1): Do You Know the Average BTC Cost Across the Entire Market?
Realized Price represents the average cost basis of BTC held across the entire market.
Navigating Web3 tides with focused insightsAuthor: Mr. Baig
🔸TL;DR
- This article introduces "one on-chain analysis concept" and "three on-chain metrics."
- MVRV represents the overall market's profit status.
- Realized Price reflects the average cost basis of all BTC holders in the market.
- Realized Cap can be thought of as "the total amount of money the market has spent buying BTC."
🟡 What Is Realized Cap?
Realized Cap, also known as realized market cap, is calculated by "multiplying each unit of BTC by its price at the time of its last transfer, then summing up all these values."
In simple terms: every transfer can be seen as a "transaction," so multiplying the amount of BTC involved in each transfer by its price at that time gives the cost basis for that portion of BTC.
Summing up all such cost bases yields the Realized Cap.
(Realized Cap chart)
🟡 What Is Realized Price?
Realized Price (RP) is derived by dividing the "Realized Cap by the current circulating supply of BTC."
We can interpret this as: "total cost spent by the entire market to acquire BTC / total number of BTC held."
In other words, this is essentially the "average cost basis of all BTC in the market."
By the way, when the market price falls below the Realized Price, it often presents a good opportunity to buy the dip!
(Realized Price chart)
(Price below Realized Price)
🟡 What Is MVRV?
MVRV stands for Market Value divided by Realized Value, indicating the profitability of the market.
MV refers to the current BTC market value—i.e., "market price × circulating supply"—while RV stands for Realized Cap.
Notably, if both numerator and denominator are divided by the circulating supply, MVRV can also be expressed as "market price / RP."
For example: if MVRV = 2, it means the average holder in the market is up 100% in profit.
(MVRV chart)
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