bitcoin continues to demonstrate resilience, holding above crucial demand levels after its recent drop from all-time highs. As the market grapples with negative sentiment and a wave of bearish predictions, btc price action remains stable, offering hope to investors contemplating a possible recovery.
To add weight to bitcoin's strength, the CEO of CryptoQuant recently shared compelling data combining on-chain and off-chain metrics. Analysis reveals that the estimated capital stored in the bitcoin network has increased to $1.03 trillion. This substantial increase underlines the narrative of btc as a solid store of value, aligning with the thesis that many analysts defend about the leading cryptocurrency.
As macroeconomic uncertainty looms, bitcoin's ability to maintain its position above critical levels offers a sense of stability to a market otherwise marked by volatility. Investors and traders are closely monitoring whether this new support will translate into a rally or whether broader market forces will further impact btc. For now, the data suggests that btc's foundation remains strong, fueling continued confidence in its long-term potential as a digital store of value.
The capital stored in the bitcoin network grows
bitcoin has had an incredible 2024, and its performance is not only reflected in price appreciation but also in key metrics that indicate the growing strength of the network. As the year comes to a close, data suggests that bitcoin's role as a Store of Value (SoV) is more evident than ever.
CryptoQuant CEO Ki Young Ju recently <a target="_blank" href="https://x.com/ki_young_ju/status/1873610072221495678″ target=”_blank” rel=”noopener nofollow”>shared valuable insights about xwhich reveals that by combining on-chain and off-chain data, the estimated capital stored in the bitcoin network has reached $1.03 trillion, an increase of 85% from the previous year.
This growth supports the idea that btc is increasingly seen as a long-term store of wealth, beyond mere speculation. Ju explains that it's not just about the market capitalization, which currently stands at $2 trillion. Adding $1 to btc does not directly translate into a $1 increase in its market cap. Instead, we can estimate capital inflow using a combination of on-chain and off-chain data.
First, off-chain exchange transactions are considered, where exchange reserves are multiplied by the volume-weighted average price (VWAP) to estimate the capital entering the market through exchanges. Secondly, on-chain data is used, particularly OTC and exchange deposits/withdrawals. bitcoin execution and settlement occur simultaneously, and capital inflows can be tracked through the realized limit, which monitors the cost basis of btc movements on the blockchain.
Combining these metrics, we arrive at the SoV Index, a tool that captures the true capital flowing into the bitcoin network. This provides a clearer picture of btc's value and its growing status as a global store of value, with data supporting its fundamental strength heading into 2025.
btc oscillating between crucial levels
bitcoin is currently trading at $93,600 after facing several days of selling pressure and fear in the market. The price reached a high of $99,880 last Thursday, but has since fallen more than 6%. This recent drop has raised concerns about bitcoin's immediate price action, but the key levels to watch are clear.
If btc manages to break through the $100,000 mark and hold it as support, it would be a bullish confirmation signal, which could pave the way for a fresh price rally. This level is psychologically significant and would reinforce the uptrend if it were to hold.
On the other hand, if the bulls lose the critical support range between $92,000 and $90,000, the market could see a deeper correction. A move below this support would likely trigger more selling, which could test lower levels in the near future.
These levels are likely to determine the direction of bitcoin in the short term. Since the market is still reacting to external factors, keeping an eye on these key zones will be essential to understanding where bitcoin is headed next.
Featured image of Dall-E, TradingView chart