- Bitcoin’s market activity is subdued, with speculation and investor movements low, potentially signaling upcoming volatility.
- Recent data shows a decline in net capital inflows, indicating market stabilization and historically low levels outside of bear markets.
- Bitcoin’s Realized Cap is at a record $619 billion, with the MVRV Ratio around 1.72, suggesting a transitional market phase.
Bitcoin’s market has been quiet, with speculations and investor movements at low levels. Current market trends are indicative of a balance between marginal profits and losses, with a reset of perpetual swap markets. Brief If history is any prelude, such tranquil periods generally tend to be short-lived and warn of impending volatility.
Recent data from Glassnode reveals that the net capital inflows into Bitcoin have slowed down, which means that there is a stabilization between profit-taking and nadir absorption. Surprisingly, the current levels of inflow can be seen as the lowest outside of bear markets which are mainly the losses. Generally, during these quiet times, the market is getting ready for high volatility, and this is evidenced by past cases.
Bitcoin’s Realized Cap and MVRV Ratio Signal Equilibrium
Bitcoin’s Realized Cap has reached an all-time high of $619 billion, bolstered by a significant $217 billion inflow since the asset’s low of $15,000 in December 2022. MVRV Ratio, which is the criterion for averaging the unrealized profits, has the same mark with the historic one of 1.72.
This level usually marks the turning point between the bull and bear market phases. At the moment, it can be observed that roughly 50% of the trading days the MVRV values are above the mean, and the investor enthusiasm has decreased after the ETF launch.
The percentage of supply in profit, a metric that assesses overall profitability, mirrors the MVRV ratio’s pattern, returning to its long-term mean. Previous occurrences of similar acts were seen in late 2016, during the turbulent period of 2019, and amid the mid-2021 sell-off.
As per current developments, there has been a decreasing trend in net realized profit and loss, now at $15 million daily, which was at $3.6 billion per day at Bitcoin’s all-time high in March. These types of reversals tend to be very important, and very likely cause a change of direction in the trend.
Coins aged three to six months, which tend to peak after major market highs, now make up over 12.5% of the circulating supply. This mirrors patterns from the mid-2021 sell-off and the 2018 bear market. Since July, there’s been a notable rise in loss-taking within this age group, suggesting a potential shift among long-term holders.
Meanwhile, the perpetual swap market suffers from low speculative activity, as the decreasing volume of liquidations indicates that traders are pulling out of dangerous positions. This drop in speculation points to the fact that the price of Bitcoin is likely to be more responsive to the spot markets soon.
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