Bitcoin traders are showing behavior reminiscent of the 2022 bear market bottom, indicating a high level of uncertainty in the market, according to recent research. On October 9, CryptoQuant, an on-chain analytics platform, conducted a market update that focused on a significant drop in the realized capitalization of the most active portion of the Bitcoin supply.
Bitcoin’s investor cohorts, particularly those categorized as more speculative, have been under scrutiny this year due to the divergent price action of BTC. Currently, the spot price of Bitcoin is hovering around the aggregate cost basis for short-term holders (STHS), defined as entities that hold BTC for 155 days or less.
CryptoQuant’s research highlights a collapse in the realized capitalization of coins that have moved within the past 24 hours to one month. Realized cap refers to the combined value, stated in U.S. dollars, of a specific group of bitcoins that are being used in transactions. By tracking the total value of the one-day to one-month (1D-1M) cohort, CryptoQuant believes it can provide insights into broader Bitcoin price action.
Binh Dang, a contributor to CryptoQuant, explained that this dataset effectively reflects Bitcoin’s market price fluctuations, as it represents recently acquired coins before they become long-term holdings or are continuously traded in the short term. The 1D-1M cohort’s realized cap dropped below $20 billion when BTC/USD hit two-year lows in late 2022. Conversely, when Bitcoin reached its peak of just below $32,000 in July, the realized cap soared to over $44 billion.
The current figure has now retreated back to bear market levels, although it has slightly recovered to hover around the $20 billion mark. Binh attributes this inconsistent recovery to general market sentiment, including macroeconomic and geopolitical issues.
The chart provided by CryptoQuant displays the Bitcoin realized cap supply data, illustrating the fluctuations in the 1D-1M cohort’s realized cap. It shows a decline in the figure, signaling the uncertainty and unpredictability in the market.
Moving forward, the research suggests that newcomers to the Bitcoin market should not expect continuous and strong price increases, as seen in the first half of this year. The market is likely to remain uncertain unless there are significant and positive trends from now until the end of the year. The volatility of the market will be unpredictable, and investors should conduct their own research and exercise caution when making investment decisions.
The research also emphasizes the percentage of the aggregate realized cap accounted for by 1D-1M coins. This further reinforces the conclusion that the market is experiencing uncertainty and potential volatility.
It is important to note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risks, and individuals should conduct thorough research before making any decisions in the market.
In summary, Bitcoin traders are exhibiting behavior similar to the 2022 bear market bottom, indicating uncertainty in the market. The realized capitalization of the most active portion of the Bitcoin supply has dropped, reflecting the volatile nature of the market. Newcomers to the Bitcoin market should not expect continuous and strong price increases, and volatility in the market will likely remain unpredictable.