Bitcoin continues its bearish price action as on-chain data shows that flows in the cryptocurrency market have declined sharply recently.
Cryptocurrency capital flows have seen a significant decline recently
As explained by analyst Ali Martinez in a new the post At X, capital inflows to the cryptocurrency sector have slowed over the past month. Capital enters (or exits) the digital asset market primarily through three asset classes: Bitcoin (BTC), Ethereum (ETH), and stablecoins. It is only once that Inflow has created these coins that they circulate altcoins.
Thus, the flows related to these assets can be considered to reflect the netflows for the cryptocurrency sector as a whole. As for how the flow can be calculated, Cap The indicator can be used in case of Bitcoin and Ethereum.
Realized Cap is an on-chain capitalization model that determines the total value of any asset by assuming that the actual value of any token in circulation is equal to the price at which it was last transacted on the network. .
The last transaction of any coin is likely to be the last point at which it changes hands, so the price at that time reflects its current cost base. Because the realized cap adds up this value for all tokens in the circulating supply, it essentially measures the amount of capital that investors have put into the asset.
Bitcoin and Ethereum capital netflows can be equated to changes in this indicator. For stablecoins, there is no need for this model because their price is always fixed around the $1 mark, so changes in their combined market cap serve as a convenient way to trace capital flows.
Now, here is the chart shared by the analyst that shows the 30-day flows related to three asset classes over the past few months:
As demonstrated in the graph above, overall netflows related to the cryptocurrency sector have been positive over the past few months, meaning a net flow of capital into various assets.
The 30-day flows seem to have peaked last month, however, as they have been trending downward since then. In this period, the value of the metric fell from $134 billion to $58 billion, representing a decrease of more than 56%.
“This points to a significant reduction in investment activity,” Martinez notes. The decline in capital flows may be due to the fact that Bitcoin and other assets have a Bearish trajectory Recently.
BTC price
Bitcoin briefly dipped below the $91,000 mark earlier in the day, but it looks like the coin is back above it as its price is now trading around $91,800.
