Bitcoin (BTC) is trading just below its all-time high, but the amount of money invested in the asset is already back to its all-time high, according to on-chain data.
Bitcoin's “realized capitalization” has risen to $467.2 billion – just $500 million (0.22%) away from its April 2022 peak of $468.3 billion, crypto analytics firm Glassnode reported on twitter.
“Realized capitalization” or “realized cap” measures the total value of all bitcoins combined based on the time and price at which each individual coin last moved, explains Glassnode's website. This is different from “market capitalization” or “market capitalization,” which indicates the total value of all Bitcoins based on the asset’s current market price.
“This means that the actual liquidity-adjusted capital invested, saved and stored in BTC is now at new highs,” Glassnode senior analyst James Check wrote on Twitter on Wednesday.
Analysts view Bitcoin's realized cap as an estimate of Bitcoin's cost base for the average network participant. Therefore, compared to Bitcoin's market capitalization, the market value to realized value ratio (MVRV) makes it easy to determine whether the average BTC buyer is making a profit or a loss.
On Monday, Glassnode's latest newsletter showed that Bitcoin's current MVRV value was 2.14, meaning the average investor is now sitting on unrealized profits of 114%, which is more than double their money.
Recent data from IntoTheBlock confirms this, showing an MVRV ratio of 2.22, with 97% of Bitcoin investors making some profit.
Bitcoin rose above $63,500 on Wednesday and is trading at $60,372 at the time of writing. The only other times Bitcoin traded higher were in April 2021 and November 2021, both all-time highs for BTC – after which the price experienced steep declines.
However, both Glassnode and IntoTheBlock agree that BTC still has plenty of room for growth before it reaches its next cyclical peak.
“While in the past it signaled a peak when MVRV was close to 4, the number has declined in each cycle,” IntoTheBlock wrote on Twitter on Tuesday.
The company also noted that retail participation in Bitcoin is still dormant due to a relatively stable number of new network addresses.
On the other hand, Bloomberg ETF analyst Eric Balchunas claims that retail investor participation could increase with the newly launched Bitcoin ETFs, which saw a lot of small individual trades on Tuesday.
“This is happening before they have options and/or are available on many advice platforms,” Balchunas wrote on Wednesday. “Definitely a big retail component given the size of the stores.”
Edited by Ryan Ozawa.
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