Bitcoin Realized Cap Shows Signs of Stagnation: What's Next?
Table of contents
Understanding Market Cycles
Percival explains that Bitcoin’s market cycles can be understood through three phases. During market tops, the realized cap flattens, signaling a shift from profit-taking to losses. In bear markets, long-term holders, or HODLers, help establish the market floor, leading to a gradual inflow of capital. Bull markets see HODLers who accumulated at lower prices take profits as the market approaches all-time highs.
Currently, Bitcoin appears to be in a recovery phase, where capital flows between long-term holders and short-term investors are balanced. This equilibrium suggests the market is neither in a strong bullish nor bearish trend.
Net Capital Flow Remains Stagnant
Despite signs of recovery, Bitcoin’s net capital inflows have remained nearly neutral since August. According to Percival, this stagnation means the profits made by HODLers are roughly equal to the losses experienced by recent buyers. For the market to break free from this neutrality, a significant price movement is needed in the next 30 days. Without it, Bitcoin could remain in a period of low activity and consolidation.