Realised Cap

The Realised Cap indicator is a valuable tool for understanding the real economic value of a cryptocurrency. It reflects the total amount of money that holders have spent to acquire the coins they currently possess.

How is it calculated?

Realised Cap is calculated as follows:

$$\text{Realised Cap} = \sum_{\text{over all holders}} \big( \text{price}_{\text{purchase}} * \text{balance} \big)$$

In other words, it is the total amount of money spent by all holders to acquire their current holdings.

Example: Imagine a holder bought 10 coins at $1 each and another 10 coins at $2 each. The total amount spent is $30, and the average purchase price is $1.5 per coin ($30 / 20 coins). The Realised Cap is the aggregate of such expenditures across all holders.

Realised Cap vs. Market Cap

While Realised Cap indicates the actual amount spent on acquiring coins, Market Cap reflects the current market value of all existing coins:

$$\text{Market Cap} = \text{Market Price} * \text{Current Supply}$$

Comparing Realised Cap to Market Cap provides useful insights:

• When Realised Cap < Market Cap:

  • Implication: The current market price is higher than the average purchase price of the coins, suggesting that the asset might be overvalued.

  • Insight: Coins are generally held at a profit, which could lead to selling pressure.

• When Realised Cap > Market Cap:

  • Implication: The amount spent to acquire the coins exceeds their current market value, indicating the asset might be undervalued.

  • Insight: Coins are generally held at a loss, which could suggest potential for buying opportunities.