On-chain data shows that Bitcoin (BTC) is trading just below its all-time highs, but the amount invested in the asset is already back to historic highs.
Bitcoin’s “realized capitalization” has surged to $467.2 billion. This is just $500 million, or 0.22%, down from the April 2022 high of $468.3 billion, cryptocurrency analytics firm Glassnode reported on Twitter.
“Realized capitalization” or “realized capitalization” measures the total value of all bitcoins based on the time and price each individual coin last moved, Glassnode’s website explains. This is different from “market capitalization” or “market capitalization,” which shows the total value of all Bitcoins based on the asset’s current market price.
“This means that the actual liquidity-adjusted capital invested, stored, and stored in BTC is now at a record high,” said Glassnode senior analyst James Check. Posted on Twitter on Wednesday.
Analysts consider Bitcoin’s realization limit to be an estimate of Bitcoin’s cost basis for the average network participant. Therefore, by comparing the market capitalization of Bitcoin through the MVRV (Market to Realized Value) ratio, you can easily determine whether the average BTC buyer is profiting or losing money.
As of Monday, Bitcoin’s current MVRV value is 2.14, according to Glassnode’s latest newsletter. This means the average investor is now enjoying unrealized profits of 114%, more than double their money.
Recent data from IntoTheBlock supports this, with an MVRV ratio of 2.22 and 97% of Bitcoin investors making some profit.
Bitcoin’s recent surge has seen 97% of holders benefit, outpacing the broader cryptocurrency market. But how do other assets stack up?
Optimism and Ethereum are showing solid numbers with returns of 91% and 89% respectively, and Dogecoin’s loyal community is not far behind.But some alternatives… pic.twitter.com/eqAUgNkZJ6
— IntoTheBlock (@intotheblock) February 28, 2024
Bitcoin surged above $63,500 on Wednesday and was trading at $60,372 at the time of this writing. The only times Bitcoin traded higher were in April 2021 and November 2021, both periods when BTC was at an all-time high and the price has fallen sharply since then.
That said, both Glassnode and IntoTheBlock agree that BTC has a lot of room to grow before it reaches its next cyclical peak.
“Historically, an MVRV close to 4 would indicate a peak, but with each cycle that number has declined,” IntoTheBlock wrote on Twitter Tuesday.
The company also suggested that retail participation in Bitcoin remains dormant, based on a relatively stable number of new network addresses.
On the other hand, Bloomberg ETF analyst Eric Balchunas argues that retail participation could heat up with the newly launched Bitcoin ETF, which saw a number of small private transactions on Tuesday.
“This was before it was an option or available on many advisory platforms.” wrote Balchunas on Wednesday. “It’s definitely a big retail component considering the size of the transactions.”
Edited by Ryan Ozawa.
