- According to on-chain data, the market was in a consolidation phase at the time of publication.
- Most holders have suffered losses since last month’s market crash.
Investor decisions, regardless of traditional finance or the crypto asset market, are driven by something as fundamental as profit and loss. The greed for further profits when markets rise and panic selling during downturns are natural reactions of market participants.
It is therefore not surprising that analysts and traders assess the market in terms of financial motivations.
How much are 1,10,100 BTCs worth today?
Analysis of Bitcoin’s realized limit
The digital asset market is taking it a step further by introducing ‘Realized Capitalization’ to describe the economic value entering and exiting the market for an asset, in this case Bitcoin. [BTC].
According to an analysis company in the chain Glass junctionrealized ceiling values are an asset based on the price of each of its coins when they last moved. For example, when BTC is issued at a price higher than the price last moved, the limit increases realized are realized and vice versa.
In this way, it is fundamentally different from the more conventional market capitalization, which measures the asset based on its current market value.
Logically, the realized cap moves upward during strong bull momentum. This is because long-term holders (LTH) are selling assets, previously accumulated at discounted rates in the bear market, at very high prices.
The above conclusion was also confirmed by data on the chain. Note how the realized limit rose to steep highs during the historic 2020-2021 bull market.
Source: Glassnode
Additionally, when expensive coins are dumped during bear markets, the realized limit is pulled lower. This period is then followed by a phase of market consolidation, during which coins return to the hands of seasoned investors.
This behavior is also captured in the graph above. Note how the realized limit fell lower during the peak of the crypto winter in 2022. The subsequent recovery in 2023 represented the continued accumulation phase.
Decreasing impact of issuance
In the case of Bitcoin, in addition to the realized gains and losses, the new coins that came into circulation through block mining also contributed to the daily realized market capitalization.
However, the quadrennial halving events have significantly reduced the issuance’s dominance. As noted below, the thermocap, i.e. the newly issued supply, paled in comparison to the realized profit and realized loss components.
Source: Glassnode
Glassnode even mentioned that since 2016, issuance was “at most” 10% of Bitcoin’s daily realized limit. That said, miner dynamics became a major source of interest for analysts during periods of subdued trading volumes, as became clear at the time of publication.
Bitcoin holders in a state of loss
Similar to the realized cap, the net realized profit/loss indicator is often used to determine market sentiment, capital inflows or outflows, and trends in network profitability.
From the image below, it is clear that most holders have suffered losses since last month’s massacre. This indicated that capital was disappearing from the market and that sentiment was anything but positive.
Source: Glassnode
Another notable aspect of Bitcoin’s realized limit was that the drawdown was significantly lower compared to the drop in spot prices. Simply put, if the price of Bitcoin falls by 75%, the drop in the realized limit would be 3x-4x smaller.
Source: Glassnode
As shown above, realized market capitalization tended to reverse around cyclical price lows. This made sense because by then most of the low value coins would have been grabbed by experienced investors who would wait for the next bull run to offload them.
Market sentiment is still neutral
The end result of the analysis was that the Bitcoin market was indeed in a consolidation phase while the halving event next year could be the bull market everyone was waiting for.
According to the latest reading of the Bitcoin Fear and Greed Index, the market was in a state of equilibrium. without extreme emotions dictating the market.
Bitcoin Fear and Greed Index is 41 – Neutral
Current price: $26,144 pic.twitter.com/bhrHXEbvce— Bitcoin Fear and Greed Index (@BitcoinFear) September 13, 2023
Is your portfolio green? Check out the BTC profit calculator
In the past 24 hours, the king coin jumped and crossed the $26,000 mark to settle at $26,324.67 at the time of writing, per CoinMarketCap.
According to Shivam Thakral, CEO of Indian cryptocurrency exchange BuyUcoin, the steady stream of Bitcoin ETF applications, the latest of which is Franklin Templeton, kept the market afloat.