A recent analysis suggests the current Bitcoin bull market might be nearing its end. This conclusion is based on a specific on-chain indicator.
New Money Flowing into Bitcoin: A Key Indicator
The indicator in question is called “Realized Cap.” It calculates Bitcoin’s total value by using the price each coin was last traded at. Think of it as the total amount of money investors have put into Bitcoin. Changes in the Realized Cap show how much money is flowing into or out of the market.
A particularly useful way to look at this is by focusing on newly purchased Bitcoin. By analyzing the Realized Cap of recently acquired coins (those held for 0-1 day, 1-7 days, and 1-4 weeks), we can see trends in fresh investment.
The Chart: What it Shows
A chart shows the percentage of Bitcoin’s total Realized Cap held by these newly purchased coins. Recently, this percentage spiked, meaning a lot of Bitcoin was bought recently – a sign of increased investment.
Historically, these spikes in new investment have coincided with price peaks in Bitcoin. However, there’s a catch.
A Worrying Trend
While recent inflows are significant, the long-term trend is concerning. Each peak in new investment has been lower than the previous one. If this trend continues, Bitcoin’s price might not have much further to climb.
What’s Next?
It’s important to note that past bull runs have seen multiple spikes in new investment before the final peak. So, while the current situation is suggestive, it’s not definitive.
Current Bitcoin Price
At the time of writing, Bitcoin is trading around $99,100, up over 6% in the last week.
