On-chain analytics firm Glassnode revealed in its latest weekly report that demand for Bitcoin has slowed recently.
Bitcoin’s cap has recently slowed its upward trend
In his new report, Glass knot discussed the latest development of Bitcoin Realized Cap. THE “Cap made” refers to an on-chain capitalization model for BTC that calculates the asset value by assuming that the value of each coin in circulation is equal to the spot price at which it was last moved on the blockchain.
Since the last transfer across the network for a coin was likely the last change of hands, the price at that time could be considered to be its current cost basis. As such, the realized cap is a sum total for the cost base of the entire supply in circulation.
In other words, this model represents the total capital used by investors to purchase Bitcoin. For this reason, this metric is used to track whether capital is flowing into or out of cryptocurrency.
Here is the graph shared by Glassnode which shows the trend of the cap achieved in Bitcoin over the last few years:
The value of the metric appears to have been heading up in recent months | Source: Glassnode's The Week Onchain - Week 21, 2024
As seen in the chart above, the cap achieved by Bitcoin had seen a strong uptrend earlier when the rally towards the new absolute record (ATH) took place. This rapid growth naturally implied a massive influx of capital into the asset.
Recently, however, the metric’s trajectory has become less steep. Its value continues to grow and new ATHs are set, but it is clear that the increase is much smaller than before.
“Currently, the rate at which new capital is flowing into the Bitcoin network has slowed significantly from its peak as the market digests recently distributed supply,” the report reads.
The graph below better represents the recent evolution of the rate of change of capital entering the sector.
Looks like the value of the indicator has rapidly gone down recently | Source: Glassnode's The Week Onchain - Week 21, 2024
When investors sell at a net profit, the realized cap increases because there is some demand to buy the coins at a higher price. On the other hand, the metric decreases when the loss is realized, because coins previously purchased with a higher capital amount were sold for a lower capital amount, thereby reducing the total investment in the cryptocurrency.
Like Bitcoin Realized Net Profit/Loss The chart shows that the market absorbed a large amount of profits during the formation of the ATH. Since then, however, the indicator has cooled considerably, further highlighting the decline in demand in the sector.
BTC Price
Bitcoin surpassed the $71,000 level yesterday, but the asset appears to have fallen today as it is now back at $70,200.
The price of the coin seems to have registered a jump over the last few days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Glassnode.com, chart from TradingView.com
