The following is from a recent issue of Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these and other on-chain Bitcoin market insights straight to your inbox, subscribe now.
The realized market capitalization of Bitcoin just broke another all-time high and crossed $400 billion. Realized price and market capitalization is an on-chain trend that we follow very closely on The Deep Dive, as realized price is essentially the baseline average cost of all bitcoins on the network.
With realized market capitalization in excess of $400 billion, the realized bitcoin price has reached $21,250.
Source: Glassnode
Source: Glassnode
When analyzing the achieved bitcoin price history, we can identify clear trends that define the underlying market trends. Covered for the first time in July in The Daily Dive #022, The Deep Dive gives a very transparent view of the state of the Bitcoin market cycle. When the realized price rises rapidly, it means that Bitcoin is in a bull market (green). This happens with a new wave of entrants entering the market and trying to secure their share of the network, putting up a huge supply in the market.
At the same time, with the price rising into a parabola (due to the fundamental supply/demand imbalance), the old holders take some chips off the table, and the dynamics of currency swapping leads to a rapid appreciation of the price/maximum achieved.
Conversely, during bear markets (in red), realized price trends are down as coins are spent at a loss (compared to when they were originally acquired). It is important to note, however, that the realized price falls relatively less than the market price/cap, which was subject to the reversal phase of the bull market.
Finally, during the accumulation phase (in yellow) of the market cycle, you will see the realized price remain flat or rise slightly as coins are moved from weak hands to strong hands, from speculators to condemned HODLers.
Although some would argue that we have been in one consistent bull market since the May 2020 halving, when looking at realized price trends we observe a bull market from October 2020 to May 2021, a short bear market for two months and now a re-accumulation phase by the trend Next is the equivalent bull.
Source: Glassnode
Some might argue that the recent uptrend reflects Bitcoin being structural in a bull market, however, it is important to note that the uptrend slope on the logarithmic scale is a true reversal of bitcoin’s bullish flow. Looking at the linear scale (graph above) of the perspective, it might look like a bull market, but logarithmicly with a multi-cycle view, it’s clear that we’re in the build-up phase, wrapping up for the next parabolic bull market move. The arrows below display the price slope achieved during each market stage.
Source: Glassnode
