Realised P/L Momentum

Realised P/L Momentum Indicator


This indicator is designed to track the momentum of net realized profit/loss (P/L) and identify potential market trends based on the behavior of the holders.

The concept behind this indicator draws inspiration from Glassnode’s Net Realized Profit/Loss metric, which measures the net magnitude of profit or loss realized by all coins spent on-chain relative to the price at which they were last moved.

However, instead of focusing solely on the calculation of net profit or loss, this indicator introduces a momentum-based approach to evaluate the market's sentiment and potential trend reversals. The emphasis is placed on the uptrend and downtrend dynamics of the realized profit/loss, helping traders and analysts gain insights into the evolving market behavior.

Key Concepts:


Net Realized Profit/Loss: This metric is calculated by subtracting the total realized loss from the total realized profit, representing the net profit or loss (in USD value) for all coins spent over a given time frame. It helps gauge aggregate market sentiment, where:

• Positive values indicate profits being realized (typically seen during bull markets).
  
  
• Negative values indicate losses being realized (common during bear markets or capitulation events).
  

Uptrend and Downtrend Conditions:

• An uptrend is defined when the short-term (e.g., 100-day) moving average of realized P/L is higher than the long-term (e.g., 235-day) moving average, signaling stronger realized profits and potentially bullish market conditions for price appreciation.
  
  
• A downtrend occurs when the short-term moving average falls below the long-term moving average, indicating increased realized losses and a possible bearish market trend for price to decline.
  

By focusing on the momentum of realized profit/loss, this indicator helps traders anticipate shifts in market behavior.