On-chain Data Suggests Continued Bitcoin Rally
According to on-chain data, the cryptocurrency market is experiencing significant positive capital netflows, indicating that the Bitcoin rally may continue. The netflows into the sector are being tracked using a Glassnode indicator, which measures the 30-day net position change in the “realized cap” of Bitcoin and Ethereum, as well as the supply change of major USD stablecoins.
Realized Cap and Capital Inflows
The realized cap is a capitalization model that calculates the total valuation of an asset based on the assumption that the price at which each token was last moved on the chain is its true value. This provides information about the amount of capital used by holders to buy the cryptocurrency. The netflow indicator also tracks the supply change of USD stablecoins, as they are commonly used for transitions in the cryptocurrency market.
Importance of Major Asset Classes
The three asset classes chosen to track capital netflows are Bitcoin, Ethereum, and USD stablecoins because a majority of transitions in the cryptocurrency market occur through them. Altcoins historically receive their capital after a rotation from these major assets.
Positive Capital Netflows Chart
A chart shows the capital netflows in the cryptocurrency sector throughout 2023. During a recent Bitcoin slump, the indicator’s value was negative, indicating that capital was leaving the sector. However, last month, the metric turned positive and led to BTC’s impressive run towards $35,000. Other altcoins also experienced surges.
The chart separately displays the net position change for the realized cap of Bitcoin and Ethereum, as well as for the supply of stablecoins. The inflows this time have primarily come through BTC and ETH, while stablecoins have seen relatively tame growth.
Continued Interest and Potential for Bitcoin Rally
The inflows into the sector have not slowed down, reaching a new 2023 high of $10.97 billion. This sustained interest from investors is a positive sign for the Bitcoin rally, indicating that it may continue to be fueled.
Bitcoin Price
Although Bitcoin’s price has been consolidating around $35,000 recently, the market inflows suggest that the rally could restart in the near future.
Hot Take: Positive Capital Netflows Support Bitcoin Rally
The on-chain data indicates that the cryptocurrency market is experiencing significant positive capital netflows, particularly through Bitcoin and Ethereum. This sustained interest from investors suggests that the Bitcoin rally may continue, as indicated by the recent surge towards $35,000. The inflows into the sector have not shown signs of slowing down, reaching a new high. This positive momentum bodes well for the future of Bitcoin and the overall cryptocurrency market.
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