Bitrabo Editorial
An analysis of the Bitcoin market has been conducted by a CryptoQuant expert named Percival, who shared insights regarding the realized cap of Bitcoin and the flow of net capital.
The realized cap is a critical metric that tracks Bitcoin (UTXO) based on its most recent movement in the network, illustrating the cost basis of all circulating coins. This metric is valuable for gauging whether there is an influx or outflow of capital in the Bitcoin ecosystem.
Status of Bitcoin’s Realized Cap
Percival noted in a recent post on CryptoQuant QuickTake that Bitcoin’s realized cap is currently at $461 billion, with a slight rise of $3 billion (0.66%). This suggests minimal activity in the market and a lack of significant net capital inflow.
To interpret this stagnation for Bitcoin, Percival outlined three important phases in Bitcoin’s market cycles. He indicated that the realized cap typically ceases to rise during market peaks, which signals a transition from profit-taking to incurring losses.
In bear markets, long-term holders (HODLers) help establish a market floor, promoting consistent capital inflow into Bitcoin. Conversely, during bullish trends, HODLers who bought at lower prices often sell off their holdings as prices approach previous all-time highs.
Considering these insights, Percival remarked that the current realized cap suggests Bitcoin is in a recovery phase, but the stagnant net capital inflow points to a cautious outlook for the short term.
The data shows that Bitcoin’s realized cap hints at a recovery, marked by a balance between long-term holders and short-term traders.
This situation usually implies the market is not decisively in a bullish or bearish trend but rather in a state of stability. Percival also mentioned that since August, net capital inflows have been almost stagnant, indicating a liquidity neutral condition in the market.
Net Inflows and the Inflection Point in Bitcoin’s Realized Cap!
The net inflows by investors since August, now at $461B, are in a recovery phase but have seen virtually no increase. This highlights that the inflow of new capital remains stagnant. – By @p_rcival
Link … pic.twitter.com/QL1qSlVMkS
— CryptoQuant.com (@cryptoquant_com) September 17, 2024
This stagnation suggests that the profits gained by HODLers are roughly balancing out the losses faced by those who bought at recent highs.
Future Outlook
Percival stresses that a notable price fluctuation in Bitcoin is crucial over the next month to disrupt this neutrality.
Without such price movements, the market might experience continued low levels of capital flow, resulting in an extended phase of stabilization.
One key measure to observe in this context is the net realized profit, which, if it approaches a value of 1, would suggest a balanced market and potentially set the groundwork for the next major market shift.
Featured image created with DALL-E, Chart from TradingView