Bitcoin set a new all-time high (ATH) above the $98,000 level today as on-chain data shows cryptocurrency flows have exploded.
Capital inflows into the crypto market now stand at nearly $63 billion per month
According to the latest weekly report from on-chain analytics firm Glassnode, the cryptocurrency sector has recently seen the injection of a significant amount of capital.
To calculate net flows in the industry as a whole, Glassnode used two metrics: Bitcoin + Ethereum Net Position Change and Stablecoin Net Position Change. The first of these tracks net changes that occur in the combined realized cap of BTC and ETH. “Realized Cap” is an on-chain capitalization model that considers the last price at which a token was traded on the blockchain as its “true” value.
Since a coin’s previous transaction was likely the last time it changed hands, the price at the time would indicate its current cost basis. As such, the realized cap is essentially the sum of the base cost of all tokens in the circulating supply.
So one way to interpret the model is to measure the amount of capital that Bitcoin and Ethereum investors as a whole have invested in cryptocurrencies. When the realized cap changes, capital flows in or out of these coins. So, BTC + ETH Net Position Change, which tracks these changes, reflects net USD flows for the two major assets.
Stablecoin Net Position Change, the second relevant metric here, simply measures net capital flows for major stablecoins by tracking changes that occur in their combined supply.
The reason the realized cap is not required for these assets is that their value remains fixed around $1; this makes their realized capital always equal to the market capitalization, which in turn equals the circulating supply with the modified unit.
Now here is the chart published by the analytics company in the report which shows the trend of the combined 30-day value of BTC + ETH and net position change of Stablecoin over the past few years:
The value of the metric appears to have seen rapid growth in recent weeks | Source: Glassnode's The Week Onchain - Week 47, 2024
The chart shows that this combined indicator has recently seen a sharp rise into positive territory, implying significant net capital inflows into assets.
“Over the past 30 days, overall inflows reached a massive $62.9 billion, with the Bitcoin and Ethereum networks absorbing $53.3 billion, while stablecoin supplies increased by 9.6 billion dollars,” the report said.
While these flows do not represent an exact measure for the cryptocurrency sector as a whole, they are a good approximation as most capital entering the market does so through Bitcoin, Ethereum, and stablecoins. Only after a rotation of these major assets do altcoins find their fuel.
Bitcoin Price
Bitcoin had surged from nearly $98,400 earlier in the day, but its price has since seen a decline as it is now down to $97,100.
Looks like the price of the coin has been marching up recently | Source: BTCUSDT on TradingView
Featured image of Dall-E, Glassnode.com, chart from TradingView.com
