Onchain 101 - Glossary
Get up to speed with terminology and acronyms we often use in our posts.
Onchain Data: Data, metrics and information extracted from the database contained within the Bitcoin blockchain.
Realised Cap: The onchain market cap, valuing each coin at the price it last transacted.
Realised Price: The Realised Price can be calculated as the Realised Cap divided by circulating supply (avg acquisition cost basis per unit of BTC).
Cost Basis Price: We can extend the concept of the realised price to look at specific investor cohorts, such as Long/Short-Term Holders. We can determine this cohort’s realised price, which reflects their average acquisition cost basis.
True Market Mean Price: The True Market Mean is an estimated average cost basis for investors who are active within the market. Think about it as the Realised Price, but it discounts the influence of lost and long-dormant supply. Much of this ancient supply holds tremendous unrealised profits, which can otherwise mask the losses held by investors who are active in the cycle. Historically, this model trades very close to the ‘middle’ of the Bitcoin price, making it an ideal mean reversion candidate.
MVRV Ratio: Market Value (M.Cap) to Realised Value (R.Cap) Ratio, tracks the average unrealised profit/loss held per coin in the supply. It is best thought of as the incentive for investors to take profit (high value), or take losses (low value).
SOPR: Spent Output Profit Ratio (SOPR) is the average profit/loss multiple ‘locked in’ by coins that transact each day. It is a powerful tool for tracking investor sentiment and sell-side, such as euphoria (greed) and capitulation (fear).
Unrealised Profit/Loss: The magnitude of ‘paper gains/losses’ held by investors, calculated as the difference between the spot price, and the acquisition price of the coin onchain.
Realised Profit/Loss: The magnitude of ‘locked-in gains/losses’ by coins that transact each day, calculated by comparing the spot price at disposal, to the original acquisition price.
Short-Term Holders (STHs): Coins held under 155-days, higher likelihood to transact (usually speculators & traders).
Long-Term Holders (LTHs): Coins held over 155-days, lower likelihood to transact (usually high conviction investors).
Should add AVIV (Active Value to Investor Value) (aka - True Market Mean): Thus we define the True Market Mean or the Active-Investor Price representative of the cost basis for
all coins acquired on secondary markets. We argue that this on-chain cost basis is the most accurate
model available for analysts seeking the aggregate average on-chain acquisition price by investors,
and thus a likely reference point for mean reversion models. Ref. Cointime Economics pg 71.