The Bitcoin market was close analyzed by CryptoQuant analyst Percival, who recently shared his insights on Bitcoin’s realized capitalization and net capital flows.
Realized Cap is a metric that tracks each Bitcoin (UTXO) at the time it was last moved on the network, effectively representing the cost base of all coins in circulation. This metric helps understand whether there is a net inflow or outflow of capital in the Bitcoin market.
Bitcoin’s Realized Capitalization Is Stagnant
As reported by Percival in a recent post on the CryptoQuant QuickTake platform, BTC’s realized capitalization currently stands at $461 billion, a modest enhance of $3 billion or 0.66%, indicating low volatility and stagnant net capital inflows.
To understand what this stagnation means for BTC, Percival identifies three key phases of Bitcoin’s market cycles. The analyst revealed that realized capitalization stops growing during market peaksindicating a transition from profit to loss.
Long-term holders (HODLers) determine the market level in bear market bounces, which leads to a steady flow of capital into BTC. Finally, in bull market ralliesHODLers who have been accumulating money at lower prices often take profits when the market approaches record highs.
Considering these points, Percival mentioned that the current realized cap suggests that BTC is in a recovery phase. Nevertheless, net capital inflows, which remain stagnant, signal a cautious outlook for the near future.
The analyst reveals that bitcoin’s realized capitalization indicates a recovery phase, characterized by balanced capital flows between long-term holders (HODLers) and short-term investors (STH).
This phase usually indicates that the market is neither in a clear bullish nor bearish trend, but rather in a state of equilibrium. Percival mentioned that net capital inflows since August have been almost non-existent, suggesting that the market is in a state of liquidity neutrality.
Net inflow and a turning point in bitcoin’s realized capitalization!
Net investor inflows since August, currently at $461 billion, are in a recovery phase but have seen virtually no growth. This underlines that the inflow of novel capital remains stagnant. – Author @p_rcival
Link 👇… photo:twitter.com/QL1qSlVMkS
— CryptoQuant.com (@cryptoquant_com) September 17, 2024
This stagnation means that the profit made by HODLers is roughly equal to the losses incurred by the largest buyers.
What’s next?
The analyst emphasizes that in order to break this neutrality, significant fluctuations in the price of bitcoin are necessary in the next 30 days.
Without such a move, the market may continue to see minimal capital flow, which could result in an extended period of consolidation.
The key indicator to look out for in this scenario is Net Realized Profit, which if it approaches 1 would indicate a balanced market, potentially setting up the next significant market move.
Featured image created with DALL-E, graph from TradngView
