CryptoQuant User Guide
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  • 🔍What is CryptoQuant
    • Introduction
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      • What is On-Chain Data?
      • What are Entities?
      • What is a UTxO?
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  • 🎯QuickStart
    • 5 Minute Data Guide
      • 3 Key On-Chain Metrics
      • 3 Key Market Metrics
      • 3 Key Indicators
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        • Miner Selling
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  • 📊CryptoQuant Metrics
    • Exchange Flows/Indicators
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      • Exchange Inflow - Spent Output Age Bands
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    • Miner Flows/Indicators
      • Miner Outflow
      • Miner to Exchange
      • Miners' Position Index (MPI)
      • Miner Supply Ratio
    • UTxO Data/Indicators
      • Profit and Loss (UTxO)
      • Profit and Loss (Supply)
      • Coin Days Destroyed (CDD)
      • Binary CDD
      • Mean Coin Age (MCA)
      • Sum Coin Age (SCA)
      • Sum Coin Age Distribution (SCA Distribution)
      • Spent Output Profit Ratio (SOPR)
        • aSOPR (Adjusted SOPR)
        • STH-SOPR
        • LTH-SOPR
        • SOPR Ratio (LTH-SOPR/STH-SOPR)
      • Net Unrealized Profit/Loss (NUPL)
      • UTXO Bands (Age)
        • UTXO Age Bands
        • Realized Cap - UTXO Age Bands
        • Realized Price - UTXO Age Bands
        • UTXO Count - Age Bands
        • Spent Output Age Bands
      • UTXO Bands (Value)
        • UTXO Value Bands
        • Realized Cap - UTXO Value Bands USD
        • UTXO Count - Value Bands
        • Spent Output Value Bands
    • Market Data/Indicators
      • Open Interest
      • Funding Rates
      • Estimated Leverage Ratio
      • Taker Buy Sell Volume/Ratio
      • Capitalization models
      • Realized Price
      • Exchange Whale Ratio
      • MVRV (Market Value to Realized Value) Ratio
    • Network Indicators
      • NVT Ratio
      • NVT Golden Cross
      • Puell Multiple
      • Stock to Flow Ratio
      • Stock to Flow Reversion
      • NVM Ratio
    • Stablecoin Exchange Flows/Indicators
      • Stablecoin Network Data
      • Stablecoin Exchange In/Outflow & Netflow
      • Stablecoin Exchange Reserve
      • Stablecoin Exchange Addresses Count
      • Stablecoin Exchange Transactions Count
      • Stablecoins Ratio
      • Stablecoin Supply Ratio (SSR)
    • Fund Data & Premium
      • Grayscale Bitcoin Trust (GBTC)
        • GBTC Digital Asset Holdings
        • GBTC Premium or Discount
      • Grayscale Ethereum Trust (ETHE)
        • ETHE Digital Asset Holdings
        • ETHE Premium or Discount
      • Coinbase Premium
      • Korea Premium Index
      • Bank Supply Ratio
  • 🛠️Web3 Analytics Tool
    • Overview
    • Cohort Data Navigation
    • Query Data Navigation
    • How to Use(Query Tool)
      • 1. DateTime Aggregation
      • 2. Query Block - Metric
      • 3. Query Block - Where
      • 4. Query Block - Group by
      • 5. Query Block - Join
      • 6. Query Block - Order by
      • 7. Save and Run
      • 8. Editing the Result
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        • Pie
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  • 📌Reference
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  • Alternative Capitalization Models
  • Final Note
  • Links to our Data

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  1. CryptoQuant Metrics
  2. Market Data/Indicators

Capitalization models

Alternative capitalization models to market price.

PreviousTaker Buy Sell Volume/RatioNextRealized Price

Last updated 1 year ago

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Alternative Capitalization Models

The market price itself can be easily manipulated by forces, especially in cryptocurrency markets, which we call noise. In order not to be fooled by market price, traders need to see multiple alternative capitalization models to see how the market is going.

Market Cap

Market Cap is defined as the total market capitalization of the coin, calculated by multiplying the total supply with its USD price.

Market Cap=Total Supply∗Price in USD\text{Market Cap} = \text{Total Supply} * \text{Price in USD}Market Cap=Total Supply∗Price in USD

Realized Cap

Realized Cap is the sum of each UTXO * last movement price. Since cryptocurrencies can be lost, unclaimed, or unreachable through various bugs, Realized Cap is introduced to discount those coins which have remained unmoved for a long period. It is one way to attempt to measure the value of the coin. This can be described as an on-chain version of the volume-weighted average price (VWAP).

Realized Cap=∑iUTXOi∗Price at creation\text{Realized Cap} = \sum_i \text{UTXO}_i * \text{Price at creation}Realized Cap=i∑​UTXOi​∗Price at creation

Average Cap

Average Cap is a forever moving average, calculated by dividing the cumulated sum of daily market cap by the age of the market. Instead of using fixed time for calculating the moving average (e.g. 50 days, 100 days ...), this serves as the true mean.

Average Cap=Market CapAge in days\text{Average Cap} = \frac{\text{Market Cap}}{\text{Age in days}}Average Cap=Age in daysMarket Cap​

Delta Cap

Delta Cap is calculated as the subtraction of Realized Cap to Average Cap. Delta Cap is often used to spot market bottoms. Moreover, by analyzing the movement of Delta Cap which oscillates between Realized Cap and Average Cap, we could notice that market tops are reached when Delta Cap is near Realized Cap (in a log scaled chart).

Delta Cap=Realized Cap−Average Cap\text{Delta Cap} = \text{Realized Cap} - \text{Average Cap}Delta Cap=Realized Cap−Average Cap

Thermo Cap (Inflows Cap)

Thermo Cap is calculated as the weighted sum of mined coins by the creation price. This measures total capitalization flowed into the blockchain network, which in turn is to be called as Inflows Cap. As shown in the below figure, by comparing to Market Cap, Thermo Cap allows traders to spot market tops or bottoms.

Final Note

In conclusion, navigating the volatile terrain of cryptocurrency markets demands a nuanced understanding that goes beyond the simplicity of market prices. Alternative capitalization models serve as indispensable tools for the discerning investor, offering a more comprehensive perspective and mitigating the impact of market noise.

The Market Cap, a fundamental metric and capitalization model, computes the total market capitalization by multiplying the coin's total supply with its USD price. Realized Cap, on the other hand, factors in the movement of coins over time, discounting those that have remained stagnant. This provides a more accurate reflection of a coin's value, akin to an on-chain version of the volume-weighted average price.

The Average Cap introduces a dynamic element, eschewing fixed time frames and offering a moving average calculated by dividing the cumulative sum of daily market cap by the age of the market. Delta Cap, the subtraction of Realized Cap from Average Cap, becomes a valuable tool for identifying market bottoms and tops. Analyzing the oscillation of Delta Cap between Realized Cap and Average Cap unveils potential market trends, particularly when Delta Cap nears Realized Cap in a log-scaled chart.

Thermo Cap, or Inflows Cap, serves as a weighted sum of mined coins by creation price, unveiling the total capitalization flowing into the blockchain network. Comparing Thermo Cap to Market Cap enables traders to identify market tops or bottoms, with a smaller gap indicating potential market bottoms.

In this dynamic landscape, where words like "volatility" and "uncertainty" are divided by the innovative spirit of blockchain, these alternative capitalization models represent a forward-looking method for traders looking to make an investment. By incorporating these measures into their analyses, traders can present a more nuanced understanding of market dynamics, better equipped to navigate the present and future of cryptocurrency markets.

Links to our Data

📊
Market Cap in CryptoQuant Live Chart
Realized Cap in CryptoQuant Live Chart
Average Cap in CryptoQuant Live Chart
Delta Cap in CryptoQuant Live Chart
Thermo Cap in CryptoQuant Live Chart
Capitalization models in CryptoQuant Data API docs
Bitcoin Average Cap. Source: CryptoQuant
Bitcoin Delta Cap. Source: CryptoQuant
Bitcoin Market Cap. Source: CryptoQuant
Bitcoin Realized Cap. Source: CryptoQuant
Smaller gap between market cap and thermo cap allows to see market bottoms as shown in red boxes.
Thermo Cap vs. Market Cap. Source: CryptoQuant