Recently, industry analytics provider Glassnode reported that long-term holders have begun distributing BTC and selling to new investors at higher prices. This movement represents an injection of new capital into the asset class, ultimately driving the realized cap to new heights. Realized cap is a measure of cumulative USD liquidity ‘stored’ in the asset class. As Bitcoin hovers below the new all-time high of $73,000, the Long-Term Holder cohort has entered the distribution phase, facilitating the transfer of assets to newer investors at increased prices.
However, this analysis was conducted as Bitcoin approached its all-time high for the second time, prior to market corrections taking place this week. Bitcoin surged to a peak price of $73,734 on March 14, experienced a 17% pullback, and then returned to $71,550 on March 28, only to face strong resistance. Subsequently, the cryptocurrency dipped below $65,000 during the Asian trading session, dropping to $64,573 before rebounding to $66,300. Currently, Bitcoin is trading 10% below its all-time high, reflecting the volatility and uncertainty in the market.
Despite the market fluctuations, Glassnode disclosed that the realized cap also achieved a new all-time high of $540 billion, escalating at an unprecedented rate of over $79 billion monthly. Through the analysis of the Realized Cap HODL Wave metric, Glassnode observed the distribution of USD-denominated wealth across various age bands. Notably, there has been a significant increase in coin-ages younger than three months, with newer investors now owning approximately 44% of the aggregate network wealth. This shift in investor behavior patterns indicates a transition in the market dynamics.
Glassnode further elaborated on the behavior of Long-Term Holders, highlighting their active involvement in the distribution cycle. These holders are realizing profits and re-activating dormant supply to meet the rising demand at elevated price levels. The realized cap continues to climb due to the revaluation of old coins, driven by factors such as GBTC and HODLers selling their holdings. Glassnode analyst ‘Checkmatey’ underscored the significance of this trend, emphasizing the impact of long-term holders’ actions on market dynamics.
In addition to Glassnode’s insights, Santiment shared observations regarding market sentiment and altcoin performance. Despite the fluctuations in Bitcoin’s price and the ongoing market corrections, the belief that Bitcoin is in a bull market has not significantly diminished based on social sentiment analysis. While the total market cap has decreased by 3% to $2.65 trillion, it remains 15% lower than its previous all-time high from November 2021. Altcoins, apart from a few select meme coins, have yet to demonstrate substantial movement in this market cycle. Today, these altcoins are experiencing negative trends, with Ethereum down 2% at $3,300, XRP losing 2.5% to $0.584, and Dogecoin dropping 3% to $0.185.
Overall, the evolving landscape of Bitcoin investment indicates a shift in investor behavior, with long-term holders playing a pivotal role in distributing BTC to new investors. As market conditions continue to fluctuate, it is essential for investors to stay informed and adapt their strategies accordingly to navigate the dynamic crypto market successfully.