The bitcoin market has been very close twitter&utm_medium=sns&utm_campaign=quicktake&utm_content=percival” target=”_blank” rel=”noopener nofollow”>analyzed by a CryptoQuant analyst named Percival, who recently provided insight into bitcoin’s realized capitalization and net capital flows.
Realized capitalization is a metric that tracks each bitcoin (UTXO) when it last moved on the network, effectively representing the cost basis of all coins in circulation. This metric helps to understand whether there is a net capital inflow or outflow in the bitcoin market.
bitcoin's realized market cap stagnates
According to Percival in a recent post on the CryptoQuant QuickTake platform, as of now, btc’s realized capitalization stands at $461 billion, reflecting a modest increase of $3 billion, or 0.66%, indicating low movement and stagnant net capital inflows.
To understand what this stagnation means for btc, Percival identifies three key phases of bitcoin market cycles. The analyst revealed that Realized capitalization stops increasing during market highs.indicating a change from profit to loss.
Long-term holders (HODLers) determine the market floor in bear market rallies, resulting in a steady flow of capital into btc. Finally, in bull market ralliesHODLers who accumulated at lower prices often take profits as the market approaches all-time highs..
Considering these points, Percival mentioned that the current realized capitalization suggests that btc is in a recovery phase. Still, the net capital inflow, which remains stagnant, indicates a cautious outlook for the near future.
The analyst reveals that bitcoin's realized capitalization is showing signs of a recovery phase, characterized by balanced capital flows between long-term holders (HODLers) and short-term investors (STH).
This phase typically indicates that the market is not in a clear uptrend or downtrend, 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.
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Net inflows and turning point in bitcoin realized capitalization.
Net investor inflows since August, amounting to $461 billion, are in a recovery phase but have hardly increased, highlighting that new capital inflows remain stagnant. twitter.com/p_rcival?ref_src=twsrc%5Etfw” target=”_blank” rel=”noopener nofollow”>@p_rcival
Link … image.twitter.com/QL1qSlVMkS
— CryptoQuant.com (@cryptoquant_com) twitter.com/cryptoquant_com/status/1835986651094344138?ref_src=twsrc%5Etfw” target=”_blank” rel=”noopener nofollow”>September 17, 2024
This stagnation means that the profits made by HODLers are roughly equivalent to the losses suffered by major buyers.
What's next?
The analyst emphasizes the need for a significant bitcoin price movement in the next 30 days to break this neutrality.
Without such a move, the market could continue to see minimal capital inflow, leading to an extended period of consolidation.
A key indicator to watch in this scenario is net realized profit, which, if trending towards the value of 1, would indicate a balanced market, possibly setting the stage for the next significant market move.
Featured image created with DALL-E, chart by TradngView
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