Bitcoin’s Realized Cap Records New All Time High of $102.9 Billion
The first problem with applying a traditional market-cap structure to bitcoin or other is that the concept was initially applied to stocks, and has since then been applied to a new asset class of cryptocurrencies. The formula for arriving at a market cap for stocks is simply circulating supply * the latest market price. This formula is seen by some as insufficient for gauging the cryptocurrency market because coins are often misplaced, unclaimed, or are inert through bugs in code and smart contracts.
Some analysts estimate that up to 15 percent of bitcoin is going to be permanently lost and therefore out of circulation, and the current market cap model does not account for these nuances. Therefore, an alternative model was proposed by Antoine Le Calvez, an engineer at Coinmetrics called realized capitalization.
Realized capitalization is based on four concepts: it minimizes the effect of lost coins, it can be generalized to UTXO chains such as bitcoin, it is similar enough to the market cap model, and it is automated.
The new model is calculated as follows. The realized cap discounts coins that might be lost and values different parts of supply at different prices, which is untypical of using the daily close of the traditional market-cap model.