The end of the Bitcoin bull cycle is near? This pattern would say so

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Quant pointed to a pattern forming on Bitcoin’s indicator that may suggest that the end of the current bull cycle may not be far away.

The realized limit of fresh Bitcoin investors may indicate the end of the cycle

In a low summary of CryptoQuant postthe analyst talked about the historical trend of fresh capital flowing into the Bitcoin sector and what this might suggest for the current cycle.

The significant on-chain metric here is the “Realized Cap”, which measures the total value of a cryptocurrency, assuming that the value of each coin in the supply is equal to the price at which it was last traded on the blockchain.

For any given coin, the last transaction will likely be the last time it changed hands, so the price at that point in time can be considered its current cost basis. Since realized capitalization sums this value across the entire supply, it essentially provides a measure of the total amount of capital that investors have put into BTC.

Changes in the indicator therefore correlate with the amount of capital flowing into or out of the market. One way to visualize this is to look at the trend in caps realized for adolescent coin age ranges.

Below is a chart shared by quantity that shows how the percentage of the total Bitcoin realized limit occupied by the three youngest age brackets in the cryptocurrency’s history has changed:

Looks like the metric has been following an overall downwards trajectory over the course of the asset's history | Source: CryptoQuant

From the chart, we can see that the total share of Bitcoin Realized Cap in the age brackets of 0 days to 1 day, 1 day to 1 week, and 1 week to 1 month has increased recently, which means that a vast amount of coins have been purchased by investors in over the last month.

This naturally indicates an increased inflow of capital into the sector. As the analyst noted in the chart, in the past, BTC inflow peaks coincided with peaks in the price itself. Over the last few cycles, this has occurred when the realized capitalization of these age brackets has been a much larger percentage of the total market than it currently is.

However, this does not mean that the ongoing Bitcoin bull market is unthreatening. The long-term trend for this indicator appears to be downward, with each peak being lower in value than the previous one.

If one extrapolates the downward trajectory to the last cycle, then the cryptocurrency may not have much room to run after all. It remains to be seen when the peak inflow will occur, although as in the past there would usually be multiple spikes before the one leading to the end of the cycle.

BTC price

At the time of writing, Bitcoin is trading at around $99,100, up over 6% in the last seven days.

Bitcoin price chart

The price of the coin has been gradually climbing up over the last few days | Source: BTCUSDT on TradingView

Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com

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