On-chain analytics firm Glassnode revealed in its latest weekly report that bitcoin demand has slowed recently.
bitcoin's Realized Limit Has Slowed Its Uptrend Recently
In his new report, glass node has discussed the latest development in bitcoin Realized Cap. “Realized limit” refers to an on-chain capitalization model for btc that calculates the value of the asset assuming that the value of each coin in circulation is equal to the spot price at which it was last moved on the blockchain.
Since the last transfer on the network of any currency was probably the last time it changed hands, one could assume that the price at that time is its current cost basis. As such, the realized limit is a sum total of the cost basis of all circulating supply.
In other words, this model represents the total capital that investors used to purchase bitcoin. Because of this, this metric is used to track whether capital flows into or out of the cryptocurrency.
Here is the chart shared by Glassnode showing the trend in bitcoin's realized limit over the past few years:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/05/Bitcoin-demand-has-slowed-39considerably39-report-says.png" alt="bitcoin Realized Limit” width=”2000″ height=”1152″ data-recalc-dims=”1″/>
The value of the metric appears to have been heading up in recent months | Source: Glassnode's The Week Onchain - Week 21, 2024
As shown in the chart above, bitcoin Realized Cap had been experiencing a strong uptrend previously, when the rally towards the new all-time high (ATH) took place. This rapid growth naturally meant that capital flowed aggressively into the asset.
Recently, however, the metric's trajectory has become less pronounced. Its value continues to grow and new ATHs are being established, but it is clear that the increase is on a much smaller scale than before.
“Currently, the pace at which new capital flows into the bitcoin network has slowed considerably from its peak as the market digests the newly distributed supply,” the report reads.
The graph below better represents how the rate of change of capital flowing into the sector has changed recently.
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/05/1716465967_676_Bitcoin-demand-has-slowed-39considerably39-report-says.png" alt="bitcoin net realized profit/loss” width=”2000″ height=”1152″ data-recalc-dims=”1″/>
Looks like the value of the indicator has rapidly gone down recently | Source: Glassnode's The Week Onchain - Week 21, 2024
When investors sell at a net profit, the realized limit increases as there is some demand to purchase the coins at a higher price. On the other hand, the metric drops when the loss occurs, as coins previously purchased with a higher amount of capital have been sold for a lower amount of capital, reducing the total investment in the cryptocurrency.
As the bitcoin net realized profit and loss chart shows, the market absorbed a large amount of profits when the ATH formed. However, since then, the metric has cooled considerably, further demonstrating the lower demand in the sector.
btc Price
bitcoin broke above the $71,000 level yesterday, but the asset appears to have fallen today as it has settled back down to $70,200.
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The price of the coin seems to have registered a jump over the last few days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Glassnode.com, chart from TradingView.com