Ratio Indicator

Definition ∞ A ratio indicator is a technical analysis tool that compares two different financial metrics or data points to generate insights into market conditions or asset valuation. These indicators often involve dividing one value by another, such as price-to-earnings ratios or market value to realized value. They help traders and analysts identify overbought or oversold conditions, assess relative strength, or confirm trends. Ratio indicators provide a quantitative perspective beyond absolute price movements.
Context ∞ In cryptocurrency market analysis, various ratio indicators are widely used to assess the health and sentiment of digital asset markets. Examples include the MVRV ratio, which compares market value to realized value, or the Puell Multiple, which examines miner revenue. News articles frequently cite these indicators to suggest potential market tops or bottoms for assets like Bitcoin. Understanding these ratios provides a deeper analytical framework for interpreting market movements and making informed decisions in the volatile crypto space.