Bitcoin (BTC) traders are displaying behavior similar to the 2022 bear market bottom as “uncertain” sentiment rules, new research argues.
In one of its Quicktake market updates on Oct. 9, on-chain analytics platform CryptoQuant examined a major drop in realized capitalization of the most active part of the BTC supply.
Bitcoin’s more speculative investor cohorts continue to come in for scrutiny this year as BTC price action experiences a variety of diverging environments.
Spot price is currently circling the aggregate cost basis for so-called short-term holders (STHS), defined as entities hodling a given amount of BTC for 155 days or less.
Now, CryptoQuant reveals that the realized capitalization, or cap, of coins which last moved between 24 hours and one month ago has collapsed in recent months.
Realized cap refers to the combined value, here in U.S. dollars, of a specific group of bitcoins being used in transactions. Tracking the total value of the one day to one month (1D-1M) cohort can give insights into broader BTC price action, CryptoQuant says.
“In my view, this dataset effectively reflects Bitcoin’s market price fluctuations,” contributor Binh Dang wrote.
“It represents recently acquired coins before they become long-term holdings or are continually traded in the short term.”
In late 2022, when BTC/USD fell to two-year lows, the 1D-1M cohort’s realized cap fell to below $20 billion. When Bitcoin peaked at just below $32,000 in July, the realized cap topped out at more than double — around $44 billion.
Binh shows that the figure has now retreated back to those bear market levels, “recovering slightly” to still hover near the $20 billion mark.
“The current change in this data (in blue and green) shows an inconsistent recovery, partly due to general market sentiment, including macroeconomic and geopolitical issues,” he continued in commentary on an illustrative chart.
$20 billion has in fact formed a broad floor for the 1D-1M group since September last year, but going forward, a stronger bounce should be viewed as unlikely.
“The market will likely remain uncertain if these data don’t show significant and positive trends from now until the year’s end,” Banh wrote.
“The volatility will be unpredictable, so newcomers should not expect continuous and strong price increases as in the first half of this year.”
Similar conclusions can be drawn from the percentage of the aggregate realized cap accounted for by 1D-1M coins.
Bitcoin 1D-1M cohort realized cap % chart (screenshot). Source: CryptoQuant
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