The Bitcoin market has been closely monitored analyzed by a CryptoQuant analyst named Percival, who recently provided insight into Bitcoin’s realized market cap and net capital flows.
The realized cap is a metric that tracks each Bitcoin (UTXO) when it last moved on the network, effectively representing the cost basis of all circulating coins. This metric helps understand whether there is a net capital inflow or outflow in the Bitcoin Market.
Bitcoin Realized Cap Sees Stagnation
According to Percival, BTC’s realized market cap currently stands at $461 billion, up modestly by $3 billion or 0.66%. This points to low volatility and stagnant net capital inflows.
To understand what this stagnation means for BTC, Percival identifies three key phases of Bitcoin’s market cycles. The analyst revealed that the realized limit stops increasing during market topsindicating a shift from profit to loss.
Long-term holders (HODLers) determine the market floor in bear market recoveries, leading to a steady flow of capital into BTC. Finally, in bull market rallies, HODLers those who have accumulated at lower prices often take profits as the market approaches record highs.
Given these points, Percival indicated that the current realized cap suggests that BTC is in a recovery phase. Still, the net capital inflow, which is stagnant, signals a cautious outlook for the near future.
The analyst indicates that Bitcoin’s realized market capitalization is showing signs of a recovery phase, characterized by balanced capital flows between long-term investors (HODLers) and short-term investors (STH).
This stage usually indicates that the market is not in a clear neither bull nor bear trend but rather in a state of equilibrium. Percival noted that net capital inflows have been virtually non-existent since August, suggesting that the market is in a state of liquidity neutrality.
Net Inflows and the Inflection Point in Bitcoin’s Realized Market Cap!
Net investor inflows since August, now $461B, are in a recovery phase but have barely increased, highlighting that the inflow of new capital is stagnating. – By @p_rcival
Link 👇… photo.twitter.com/QL1qSlVMkS
— CryptoQuant.com (@cryptoquant_com) September 17, 2024
This stagnation means that the profits HODLers make are roughly equal to the losses suffered by the biggest buyers.
What’s next?
The analyst emphasizes that significant price movements in Bitcoin are needed in the next 30 days to break this neutrality.
Without such a move, capital flows into the market may remain minimal, leading to a prolonged period of consolidation.
An important indicator to watch in this scenario is the realized net profit. If this moves towards the value of 1, this would indicate a balanced market, potentially paving the way for the next important market movement.
Main image created with DALL-E, chart from TradngView