Definition ∞ Realized loss ratio is a financial metric that compares the total value of losses taken by investors to the total value of profits taken. In cryptocurrency markets, this onchain indicator assesses the aggregate losses realized by market participants when they sell assets for less than their acquisition cost, relative to realized gains. It provides insight into the overall profitability or capitulation sentiment within the market. A high ratio can signal periods of significant investor stress or potential market bottoms.
Context ∞ The realized loss ratio is a key tool for onchain analysts seeking to understand market sentiment and identify potential turning points in digital asset cycles. News reports often cite this metric during significant market downturns to gauge the extent of investor capitulation. Monitoring this ratio helps observers assess whether selling pressure is diminishing or if further price corrections are probable.
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