SPV Ratio

Definition ∞ The SPV Ratio, or Spent Output Profit Ratio, is a blockchain metric that assesses the profitability of transactions by comparing the value of spent UTXOs (Unspent Transaction Outputs) to their original acquisition cost. It indicates whether the assets being moved on-chain are being sold at a profit or a loss. A high SPV Ratio suggests that a significant portion of transactions are profitable, potentially signaling bullish market conditions. Conversely, a low ratio may indicate a market where participants are selling at a loss.
Context ∞ The SPV Ratio is a key analytical tool for understanding investor behavior and market sentiment within cryptocurrency networks, particularly Bitcoin. Current analyses focus on its application in identifying potential market tops or bottoms based on aggregate profitability. Future research may involve refining the calculation to account for various transaction types and to better interpret its signals across different blockchain protocols.