Realized Cap Analysis

Definition ∞ Realized Cap Analysis is an on-chain metric that assesses the aggregate cost basis of all cryptocurrencies in circulation. This analytical method calculates the value of each coin or token at the time it last moved on-chain, summing these values to provide a more accurate representation of the market’s true capital inflow compared to traditional market capitalization. It helps distinguish between speculative holdings and long-term investor conviction, offering insights into market cycles, investor profitability, and potential support or resistance levels. Realized cap analysis provides a fundamental perspective on market valuation.
Context ∞ Crypto analysts widely use Realized Cap Analysis, especially for Bitcoin, to gauge market sentiment and identify macro market trends. News reports often reference the ratio of market cap to realized cap to determine if the market is overvalued or undervalued. A key discussion involves applying this sophisticated metric to other digital assets and developing new derivatives for deeper market understanding.