Bitcoin hit a new all-time high (ATH) above the $98,000 level today as on-chain data shows cryptocurrency inflows have skyrocketed.
Crypto market capital inflows now amount to almost $63 billion per month
According to the on-chain analytics company’s latest weekly report Glass junctionthe cryptocurrency sector has recently seen the injection of a significant amount of capital.
To calculate net flows to the sector as a whole, Glassnode used two metrics: Bitcoin + Ethereum Net Position Change and Stablecoin Net Position Change. The first of these tracks the net changes that occur in the combined realized limit of BTC and ETH. The “Completed hood” is an on-chain capitalization model that considers the last price at which a token traded on the blockchain as its “real” value.
Given that a coin’s previous transaction was likely the last point at which it changed hands, the price at the time would indicate its current cost basis. As such, the realized limit is essentially a sum of the cost base of all tokens in the circulating supply.
One way to interpret the model, therefore, is as a measure of the amount of capital that Bitcoin and Ethereum investors as a whole have invested in the cryptocurrencies. When the realized limit changes, capital flows in or out of these coins. Thus, the BTC + ETH Net Position Change, which tracks these changes, reflects the USD net flows taking place for the two major assets.
The Stablecoin Net Position Change, the second relevant metric here, simply measures the capital net flows for the major stable coins by monitoring the changes taking place in their combined offering.
The reason the realized limit is not required for these assets is that their value remains around $1; this ensures that their realized limit is always equal to the market capitalization, which in turn is equal to the circulating supply with the changed unit.
Here is the chart published by the analytics company in the report showing the trend in the 30-day combined value of the BTC + ETH and Stablecoin Net Position Change over the past years:
The value of the metric appears to have seen rapid growth in recent weeks | Source: Glassnode's The Week Onchain - Week 47, 2024
The chart shows that this combined indicator has recently shown a sharp rise into the positive territory, implying large net capital inflows into the assets.
“Over the past 30 days, total inflows have reached a massive $62.9 billion, with Bitcoin and Ethereum networks absorbing $53.3 billion, while stablecoin supply has increased by $9.6 billion,” it said report.
While these inflows are not an exact measure of the cryptocurrency sector as a whole, they do act as a good approximation as the majority of capital flowing into the market does so through Bitcoin, Ethereum, and the stablecoins. It is only after a rotation of these important assets that the altcoins get their fuel.
Bitcoin price
Bitcoin was up almost $98,400 earlier in the day, but the price has since seen a pullback as it has now fallen to $97,100.
Looks like the price of the coin has been marching up recently | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, chart from TradingView.com