Hello everyone! Today, I would like to talk to you about a novel indicator - Realized Cap HODL Waves. This index is different in that it is not calculated by the number of bitcoins or market capitalization, but by the dollar value realized by the tokens, which is the economic weight. In this way, we can see the relationship between the time the token is held and the market changes.
For example, let's say you buy a bitcoin and leave it for five years, but the market price of bitcoin rises during that time. Then, according to HODL Waves' algorithm, the value of your bitcoin will also rise, which is called fulfillment. If you've bought and sold some Bitcoin in those five years, those transactions will also have an impact on your total realized value. This way, your bitcoins will be divided into different age groups, and the value of each age group will be different.
Realized Cap HODL Waves is based on the comparison of the total realized value and market value of tokens in each age group to determine the relative weight of tokens held for different periods of time, as well as the market changes brought about by these holding and trading behaviors. Because of the Realized indicator, the currency influence of a long time ago is basically eliminated. Because if your bitcoin has been left for a long time, it is likely that you will not know where it has gone, but as the market becomes more and more mature, you may find that it was lost in the past five years, and it may be longer and longer in the future.
So how is Realized Cap HODL Waves calculated? First, the active supply band is measured by counting the number of tokens that have been traded within a certain time window. Then, multiply the tokens that fall into the active supply band by their respective realization prices, which provides a combination of age and economic value. Finally, each realized active supply band is weighted relative to the realized market capitalization. In this way, we can derive the ratio of the realized market capitalization to the total realized market capitalization of the tokens for different holding periods, thus forming a chart of the Realized Cap HODL Waves.
So what is this indicator for? First of all, it can help us better understand market sentiment. For example, if we focus on young coins that are less than 6 months old, we can see the fluctuations in market prices and understand the short-term trend of the market. If we focus on coins that are older than 6 months, we can see the stability of the market price and understand the long-term trend of the market.
Secondly, it can also be used in conjunction with our investment gains, losses, to give us an idea of how long we have spent our tokens, and how far it may affect the direction of money flow in the market. Finally, it also helps us screen for age-specific tokens, allowing us to see market changes more clearly.
In conclusion, the Realized Cap HODL Waves indicator is a very useful tool that allows us to understand the market and our investments from a whole new perspective, helping us to make more informed decisions. Okay, that's all for today's sharing, I hope it will be helpful to everyone. If you are interested in this indicator, you can go to the Internet to search for relevant information, I believe you will have a lot of gains. Until next time!