Bitcoin (BTC) reached a temporary yearly price high of $31.7k, but the overall market remains stagnant within an exceptionally narrow trading range. Various metrics indicate a slow and steady capital inflow, reminiscent of the choppy market conditions witnessed in 2016 and 2019-2020.
The latest Week On-Chain Glassnode report sheds light on the current state of the market. Despite Bitcoin’s brief surge, the market has fallen into tranquility, with the Bollinger Bands compressed to a mere 4.2% price range.
The realized cap, a critical on-chain metric reflecting the cumulative sum of all discovered profit and loss events, hovers just below $400B. This suggests a gradual influx of capital into digital assets, primarily driven by BTC and ETH, the two significant assets in the market.
While profit dominance remains intact, the magnitude of USD value locked in is nearing cycle lows, indicating that investors hesitate to part with their holdings. This market sentiment mirrors the choppy conditions observed in 2016 and 2019-2020.
Despite the lack of volatility, digital assets continue to attract a steady stream of capital. The Realized Cap, a reliable indicator that shows true capital flows into Bitcoin, reveals a consistent influx of funds throughout 2023. This increase in demand is reflected in the higher prices at which coins are exchanged.
Interestingly, the net realized profit/loss (NRPL) metric suggests a sustained profit regime 2023, with approximately $270M per day in net inflows. This level is comparable to the first half of 2019 and late 2020 but significantly smaller than the extraordinary peaks in the 2021 bull market.
Comparing Bitcoin And Ethereum Realized Caps
Furthermore, the comparison between Bitcoin and Ethereum Realized Caps and the supply of top stablecoins reveals that most capital flows are directed towards BTC and ETH, with a positive net inflow of $21.9B and $18.0B, respectively.
In contrast, major digital assets have witnessed a significant increase in popularity, resulting in a considerable decrease of -$10.4B in the overall supply of stablecoins. It highlights the prevailing preference for major digital assets over stablecoin investments.
Analyzing exchange inflow volumes reveals that Short-Term Holders (STH) are the primary active entities in the market, accounting for 78% of the total daily inflow of 39.6k BTC. As the STH cohort holds over 88% of their balance in profit, they are increasingly inclined to spend and take profits as prices rise.
While Long-Term Holders (LTHs) have a comparatively lower percentage of their balance in profit, at just over 73%, it indicates that a significant portion of LTH supply was acquired at prices above $30k within the 2021-2022 cycle.
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