The Bitcoin market has been closely analyzed by a CryptoQuant analyst named Percival, who recently provided insights into Bitcoin’s realized cap and net capital flows.
The realized cap is a metric that tracks each Bitcoin (UTXO) when it was last moved on the network, effectively representing the cost basis of all circulating coins. This metric helps to understand whether there is an inflow or outflow of net capital in the Bitcoin market.
Bitcoin Realized Cap Sees Stagnation
According to Percival in a recent post on the CryptoQuant QuickTake platform, as of now, BTC’s realized cap stands at $461 billion, reflecting a modest increase of $3 billion, or 0.66%, indicating low movement and a stagnant net capital inflow.
To understand what this stagnation means for BTC, Percival identifies three key phases of Bitcoin’s market cycles. The analyst disclosed that the realized cap stops rising during market tops, indicating a shift from profit to loss.
Long-term holders (HODLers) determine the market floor in bear market recoveries, leading to steady capital flow into BTC. Lastly, in bull market rallies, HODLers who accumulated at lower prices often take profits as the market approaches all-time highs.
Given these points, Percival mentioned that the current realized cap suggests BTC is in a recovery phase. Still, the net capital inflow, which remains stagnant, signals a cautious outlook for the near future.
The analyst reveals that Bitcoin’s realized cap shows signs of a recovery phase, characterized by the balanced capital flows between long-term holders (HODLers) and short-term investors (STH).
This phase typically indicates that the market is neither in a clear bull nor bear trend but rather in a state of equilibrium. Percival mentioned that the net capital inflows since August have been nearly non-existent, suggesting the market is in a state of liquidity neutrality.
Net Inflows and the Inflection Point in Bitcoin’s Realized Cap!
The net inflows by investors since August, now at $461B, are in a recovery phase but have seen virtually no increase. This highlights that the inflow of new capital remains stagnant. – By @p_rcival
Link 👇… pic.twitter.com/QL1qSlVMkS
— CryptoQuant.com (@cryptoquant_com) September 17, 2024
This stagnation implies that the profit made by HODLers is roughly equivalent to the losses incurred by top buyers.
What Is Next?
The analyst emphasizes the need for significant Bitcoin price movement in the next 30 days to break this neutrality.
Without such movement, the market may continue to see minimal capital flow, leading to a prolonged period of consolidation.
A key indicator to watch in this scenario is the net realized profit, which, if it trends toward 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 from TradngView