The MVRV (Market Value to Realized Value) ratio compares the current market cap to the realized cap. Realized cap values each coin at the price it last moved on-chain, essentially representing the aggregate cost basis of all holders. When MVRV is above 3, it means the average holder is sitting on a 200% unrealized gain, historically a zone where selling pressure intensifies. When MVRV is below 1, the average holder is underwater, historically a zone where accumulation by long-term holders begins.
The Puell Multiple looks at miner revenue relative to its 365-day moving average. When miner revenue is high relative to its average (Puell Multiple above 4), miners are earning windfall profits and tend to sell aggressively, creating selling pressure. When miner revenue is low relative to its average (Puell Multiple below 0.5), miners are under stress, marginal miners capitulate, and the selling pressure subsides. Both extremes have historically marked cycle turning points.
The Reserve Risk metric attempts to quantify the confidence of long-term holders relative to the price. When Reserve Risk is low, long-term holders are not selling despite having the opportunity (high confidence). When Reserve Risk is high, long-term holders are taking profits aggressively (declining confidence). Historically, periods of low Reserve Risk have been good times to accumulate, while high Reserve Risk readings have coincided with cycle tops.
HODL waves visualize the age distribution of all Bitcoin. Each band represents coins that last moved within a specific time range (1 day, 1 week, 1 month, 3 months, etc.). During accumulation phases, the older bands grow as people buy and hold. During distribution phases, old coins start moving (the bands shrink) as long-term holders sell to new buyers. The relative growth and shrinkage of these bands tracks the cycle of accumulation and distribution.
Spent Output Profit Ratio (SOPR) measures whether coins being moved on-chain are being sold at a profit or loss. A SOPR above 1 means the average coin moved is in profit. Below 1, the average is at a loss. During bull markets, SOPR tends to stay above 1 with dips to 1 acting as support (people buy the dip). During bear markets, SOPR stays below 1 with spikes to 1 acting as resistance (people sell into relief rallies).
The realized profit/loss ratio tracks the aggregate realized gains versus realized losses on-chain. During distribution phases at cycle tops, realized profits spike as early holders take gains. During capitulation at cycle bottoms, realized losses spike as recent buyers panic sell. The transition from profit-dominated to loss-dominated on-chain activity has historically marked the shift from bull to bear markets.
Supply in profit percentage shows what fraction of the total supply is currently worth more than when it was last moved. At cycle tops, typically over 95% of supply is in profit. At cycle bottoms, this figure drops to 40-50%. The metric behaves as a mean-reverting oscillator. Extreme readings in either direction have historically been followed by moves toward the average.
The limitation of cycle metrics is that past cycles are a small sample size. Bitcoin has only had a few complete market cycles. The dynamics may be changing as the market matures, institutional participation grows, and the halving supply impact diminishes relative to total supply. Metrics that worked well in 2017 and 2021 might behave differently in future cycles.
The practical approach is to monitor multiple on-chain cycle indicators and look for confluence. When several independent metrics simultaneously flash extreme readings, the signal is more reliable than any single indicator. Use these readings to adjust your position sizing and risk management rather than as binary buy/sell triggers. The on-chain data tells you about the environment. Your trading rules should tell you what to do in that environment.