The recent report from Glassnode on April 2 indicated that long-term holders of Bitcoin have begun distributing their holdings and selling to new investors at higher prices. This activity has resulted in an injection of new capital into the asset class, leading to a rise in the realized cap. The realized cap, which measures cumulative USD liquidity stored in the asset class, has reached new heights as a result of this distribution phase among long-term holders.
The analysis from Glassnode was conducted as Bitcoin was approaching its all-time high of $73,734 for the second time. However, shortly after reaching this peak price, the market began to retreat, with Bitcoin dropping to just below $65,000 during the Wednesday morning Asian trading session. Despite a slight recovery to $66,300, Bitcoin is currently down by 10% from its all-time high. This price volatility has led to uncertainty in the market as resistance levels are tested.
Despite the price fluctuations, Glassnode’s analysis revealed that the realized cap of Bitcoin has also reached a new all-time high of $540 billion. This increase in realized cap is occurring at an unprecedented rate, with an additional $79 billion being added per month. The Realized Cap HODL Wave metric was used to analyze the distribution of USD-denominated wealth among different age bands of Bitcoin. The analysis showed a significant increase in coin-ages younger than three months, indicating that newer investors now hold around 44% of the aggregate network wealth.
Glassnode concluded that there has been a distinct shift in investor behavior patterns, with long-term holders entering into a distribution cycle to realize profits. This behavior is driven by the revaluation of old coins to higher prices, both from GBTC and by HODLers selling their holdings. The increase in realized cap is a reflection of this changing investor sentiment towards realizing profits and satisfying new demand at higher price levels.
Santiment also reported that despite the market volatility, the belief that Bitcoin is in a bull market has not significantly diminished according to social sentiment. The total market cap is currently down by 3% to $2.65 trillion, which is approximately 15% lower than its previous all-time high. Altcoins, on the other hand, have yet to experience significant movements in this market cycle, aside from a few meme coins that have been pumped. Ethereum is down by 2% at $3,300, XRP has lost 2.5% falling to $0.584, and Dogecoin has dropped by 3% to $0.185.
The analysis of Bitcoin’s realized cap and investor behavior patterns indicates a shifting landscape in the cryptocurrency market. With long-term holders distributing their holdings to new investors at higher prices, and the realized cap reaching new heights, the market is experiencing increased activity and volatility. Understanding these trends and behaviors is crucial for investors and traders looking to navigate the ever-changing world of cryptocurrencies.
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