What is the Bitcoin Realized HODL Ratio?


Bitcoin Realized HODL Ratio is one of the metrics to identify the behaviour of Bitcoin investors, helping to understand market cycles & potential turning points for Bitcoin’s trade price.

The Realized HODL Ratio metric compares how newer, less committed Bitcoin investors, or say short-term holders, act compared to more committed, experienced investors, or say, long-term holders.

Realized Cap 

Realized Cap is the total value of all bitcoins based on the price at which they were last moved, rather than the current market price. This can offer a more accurate idea of how much the entire market values their bitcoins.

This ratio divides the realized cap of recently moved bitcoins (short-term holders) by the realized cap of bitcoins that haven’t been moved for a long time (long-term holders).

High values

High values of the ratio may indicate that new or short-term investors are dominating the Bitcoin market, which might happen near market peaks where there’s more speculative trading.

Low values

Low values of the ratio might suggest that long-term holders are dominating the market, which usually happens near market bottoms. It indicates a strong group of investors who are not selling even if prices drop.

Case 1 

Let’s Imagine that Bitcoin’s trade price is surging fast & in that situation a lot of new investors are buying Bitcoin, hoping to make quick money. These types of investors might sell their Bitcoin holdings soon if they see small % profits or if the market goes down.

In this situation, we will say that the Realized HODL Ratio is high, showing that a big part of the Bitcoin market value is held by short-term investors.

Case 2 

Now consider another situation where a major Bitcoin trade price drop occurred. In that situation many speculative investors have sold their Bitcoin, leaving mostly those who plan to hold it for a long time, believing in Bitcoin’s future rise. These holders haven’t moved their Bitcoin for a long time.

In this scenario, we will say that the Realized HODL Ratio is low and this situation will indicate long-term holders dominating the Bitcoin market value.

Read also: Bitcoin “Coin Days Destroyed” metric explained!