Definition ∞ Investor realized profit refers to the financial gain achieved when a digital asset is sold for a price higher than its initial purchase cost, after accounting for all transaction expenses. This metric represents the actual earnings an investor has secured from their holdings, as opposed to unrealized gains which only exist on paper. It is a critical indicator of market participants’ profitability and a key component in tax calculations. This profit signifies a completed and successful investment cycle.
Context ∞ News and market analyses frequently highlight investor realized profit to gauge overall market health and investor sentiment. Periods of high realized profit can indicate market tops or significant selling pressure, while low or negative realized profit might suggest capitulation or accumulation phases. This metric is closely watched by analysts to understand the economic behavior of cryptocurrency holders. This aids market forecasting.
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