- Bitcoin market is currently stagnant with minimal demand and supply activity; Realized Cap has remained flat at $622 billion for two months.
- Glassnode reports a prolonged six-month market band with steady capital inflows and outflows, reflecting limited price movement and volatility.
- The ‘Hot Supply’ metric has dropped to 4.7%, indicating increased HODLing and a decrease in Bitcoin available for active trading.
- Despite high stablecoin liquidity, capital isn’t flowing into Bitcoin yet; narrow price ranges suggest a potential for increased volatility and upcoming market breakout.
The Bitcoin market is in an extended phase of stagnation, and there isn’t much activity on either side: demand and supply. Meanwhile, it is characterized by minor capital movements; the Realized Cap, for example, has remained flat at $622 billion in the last two months.
According to Glassnode’s report, the Realized Cap is a significant measure that determines the cumulative capital netflow into and out of the Bitcoin network. The market has been in a band for six months, drying, bordering inflows, and money outflows.
Most of the transactions are executed at the offered price of the coins. The Net Realized Profit/Loss, on the other hand, reflects the more or less equal loss and gain scenario, thus the analogy of a stationary roller coaster during August-September 2023.
Bitcoin Supply Constraints and HODLing Behavior
On the supply side, the ‘Hot Supply’ metric, which represents the wealth held by coins one week and less in age, has fallen back into a low liquidity zone of just 4.7% of the total network wealth. This can only suggest that the supply side is constricting since most Bitcoins are now held in longer-term holders.
HODLing behavior remains very dominant, with the action making ‘stored supply’ surge upward posthaste to further squeeze supply available for active trading.
Meanwhile, stablecoins have continued leading as the most liquid currency on exchanges, flowing close to its all-time supply high at $160.4 billion. The increase of stablecoin capital suggests investor buying power is huge and ready to be transferred into digital assets. However, in line with the SSR oscillator, this capital is not being rotated back into Bitcoin and riskier assets, at least not yet. The SSR stands at historic lows.
The market has gotten less volatile, with the Bitcoin price largely staying range-bound for the past six months. These extremely narrow price ranges have typically been a precursor to increased volatility.
Accordingly, the Sell-Side Risk Ratio, accounting for the realized profit and loss taken by investors, has reached low values reflecting minimal profit realization or taking of losses by a few investors, thus showing that equilibrium is reached. This further indicates that a breakout in either direction can be close by.
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