By
Bena Ilyas
May 17th, 2024
Amid the strong institutional inflows into Bitcoin following the launch of the spot Bitcoin ETF, the realized cap has been on an upward trajectory.
The world’s largest cryptocurrency Bitcoin (BTC) has been recently under some selling pressure correcting more than 10% since its all-time high in March. However, the positive development is that the Bitcoin realized cap has touched a new all-time high as capital inflows into BTC continue at an unprecedented rate.
Glassnode, an on-chain analytics platform sheds light on the ‘realized cap’ of Bitcoin. The realized cap for a cryptocurrency basically evaluates the total value of the asset considering that each coin’s value in circulation is equal to its price during the last blockchain transactions, instead of the current spot price.
This approach takes into consideration the cost basis of all circulating coins since the latest transaction typically involves a sale. As a result, the Realized Cap provides insights into the overall capital invested by investors in acquiring Bitcoin. The below chart throws some light on the BTC realized cap over the past few years.
Photo: Glassnode
The above graph clearly shows that the Bitcoin Realized cap has been on an upward trajectory in recent times while setting up new all-time highs. This development is very much in tune with the BTC price surging to its new all-time highs.
Also, another major reason behind the uptrend in the Realized Cap is that investors have been active in trading with the price going up. furthermore, old hands might be moving their BTCs in order to harvest their profits and resetting the cost-basis of their coins to the current high price levels. In its assessment, Glassnode noted:
“As these coins change hands, we can also consider this to be an injection of fresh demand and liquidity into the asset class.”
Capital Rush into Bitcoin
Amid the launch of the spot Bitcoin ETFs, the capital inflows into Bitcoin have been unprecedented. So far, the newly launched Bitcoin funds in the US have attracted more than $12 billion in net inflows.
The launch of the spot Bitcoin ETFs has exploded institutional inflows into the cryptocurrency. According to IncomeSharks, a crypto analyst, the precision with which the channel aligns with the low and high points, nearly reaching $100,000, is remarkable.
#Bitcoin – It's amazing when you draw the channel from the low and high it hits $100,000 almost perfectly. Selling is a bullish catalyst and if you've been around long enough you know how much it thrives on fear and doubt. Convince everyone the halving was a flop, then send it. pic.twitter.com/RcLbuAKvKN
— IncomeSharks (@IncomeSharks) April 3, 2024
They assert that selling serves as a bullish catalyst in the market, highlighting the tendency of the crypto space to thrive on sentiments of fear and doubt. IncomeSharks suggests a strategy of persuading everyone that the halving event was unsuccessful, ultimately driving the market upwards.