The recent surge in the Bitcoin Realized Cap has set a new all-time high (ATH), according to data from on-chain analytics firm Glassnode. However, the rate of monthly inflows has considerably slowed down.
The Realized Cap is a capitalization model for Bitcoin that assumes the ‘real’ value of a token in circulation is equal to the spot price at which it was last transacted on the network. This model uses the last transaction of a coin as the basis of its current cost. By summing up the acquisition value of all tokens part of the circulating supply, it determines the amount of capital that investors have collectively used to purchase Bitcoin.
The chart shared by Glassnode illustrates the trend in the Realized Cap value over the last few years. The Bitcoin Realized Cap has been on an uptrend, indicating a net inflow of capital into the cryptocurrency. This long-term surge demonstrates that Bitcoin has been enjoying continuous inflows.
However, the growth rate has not been constant throughout this period. The Realized Cap experienced a notably sharp rise during two periods: Q1 2024 and Q4 2024. The first phase was followed by a significant slowdown in capital inflows, and the second phase has shown a similar trend. The growth rate dropped from around 13% per month in December to a mere 0.9% per month now.
Despite the slowdown, the Realized Cap has set a new record of $872 billion. Nonetheless, as Glassnode points out, the slower growth rate could suggest that investor interest is waning, a fact that could indicate continued risk-off sentiment.
Interestingly, the periods of heightened capital inflows in 2024 coincided with bull rallies for Bitcoin, while the slowdown phase resulted in bearish consolidation for the cryptocurrency. As the recent dip in Realized Cap growth has led to a significant drawdown in Bitcoin’s price, it suggests a possible trend; a proper reversal for Bitcoin may not occur until the metric picks up a sharper uptrend.
As of now, Bitcoin’s price has been relatively stagnant, hovering around the $84,700 mark. While the Realized Cap reaching an all-time high is a significant achievement, the slower growth rate and its potential implications for investor sentiment are important points for stakeholders to consider. The coming months will be crucial in determining whether this trend represents a temporary slowdown or the beginning of a more substantial shift in the Bitcoin market.
Featured image courtesy of Dall-E, Glassnode.com, chart from TradingView.com.
