Realized cap
Realized cap is one way to measure the value of Bitcoin. Each bitcoin is counted at the price it had the last time it moved on the blockchain, not at its current price.
What is realized cap?
The Bitcoin supply consists of individual, unspent amounts of BTC. Each amount is called a UTXO. A UTXO gets a price tag when it is created.
Realized cap adds up the value of all these existing amounts of BTC. This makes it similar to an estimate of the total on-chain cost basis. It doesn't precisely measure how much money people have actually invested.
Market cap works differently. It values all Bitcoin at the current price. Realized cap mainly changes when BTC is sent on-chain and new UTXOs are created.
An example of realized cap
Suppose you receive 1 BTC when Bitcoin is worth $20,000. For realized cap, that BTC gets a price tag of $20,000.
Five years later, Bitcoin is worth $60,000, but you haven't sent the BTC anywhere. Market cap counts it as $60,000. Realized cap still counts it as $20,000. If you send the BTC, new amounts of BTC are created with a price tag based on the price at that time.
Why is realized cap important in crypto?
In crypto news, realized cap is often compared with market cap. This helps analysts see whether the current market value is, on average, higher or lower than the price tags on the existing Bitcoin supply.
If realized cap rises, older coins have often moved at a higher price. If it falls, coins may have moved at a lower price. This doesn't automatically mean people have bought or sold: someone might also send BTC to another crypto wallet they own.
Realized cap can help people better understand on-chain activity. It doesn't predict the price of Bitcoin and isn't a standalone buy or sell signal.
