GlassNode Capital slowly enters the market, Bitcoin may maintain a volatile situation.

GlassNode Capital enters market, Bitcoin remains volatile.

Although Bitcoin temporarily reached a yearly high of $31,700, the Bitcoin market is still confined within a narrow price range. Multiple indicators show that capital is slowly flowing into the Bitcoin market, with some indicators resembling those of the extremely volatile periods in 2016 and 2019-2020.


  • Although Bitcoin temporarily reached a yearly high of $31,700, the market remains stable, with the price range of the Bollinger Bands (an indicator that measures Bitcoin price volatility) differing by only 4.2%.
  • The “realized market capitalization” of Bitcoin hovers slightly below $400 billion, and capital is slowly flowing into the cryptocurrency market, mainly driven by the two mainstream assets BTC and ETH.
  • Overall, the Bitcoin market is in a profitable state, but the realized total value is at a cyclical low, indicating that holders are still reluctant to sell their Bitcoin.
  • Some indicators in the current market resemble those of the extremely volatile periods in 2016 and 2019-2020.

Capital is flowing into the Bitcoin market

Although Bitcoin temporarily reached a yearly high of $31,700, its upward momentum was not sustained, and the price of Bitcoin returned to consolidating above $30,000.

The volatility of the current Bitcoin market is still very low, with the “Bollinger Bands” price range of Bitcoin differing by only 4.2%. This can be said to be the most stable Bitcoin market since early January this year.

Figure 1: Bitcoin Bollinger Bands

Capital is still flowing into the cryptocurrency market at a stable and slow pace. “Realized market capitalization” is a very macro and commonly used on-chain indicator that can be used to observe the real capital flowing into the Bitcoin market. It is considered as the “on-chain value” and reflects the cumulative sum of all realized gains and losses in the past.

The “realized market capitalization” of Bitcoin is currently slightly below $400 billion and is continuously growing, indicating that Bitcoin is being traded at higher prices and the demand for Bitcoin is increasing.

Figure 2: Realized Market Capitalization

During bear markets, a large amount of capital tends to flow out of the Bitcoin market. In 2022, Bitcoin’s “realized market capitalization” decreased by 18.8%, indicating how weak the bear market was last year. In previous cycles, it took 239, 193, and 95 days respectively for the “realized market capitalization” to recover from the low point to the all-time high (ATH), while it has been 188 days since the low point of 2022.

Figure 3: Decrease in Realized Market Capitalization

Next, we analyze the NRPL indicator (the difference between realized profits and losses), which is a derivative indicator of realized market value.

For most of this year, the NRPL indicator has been greater than 0 (meaning that most of the Bitcoin traded has been profitable), with a net inflow (profits minus losses) of approximately $270 million per day. This is the first time since April 2022 that it has entered a sustained profitable state, similar to the first half of 2019 and the end of 2020.

However, compared to the bull market in 2021, $270 million is not much, considering that the average daily net inflow during the bull market in 2021 exceeded $3.68 billion.

Figure 4: NRPL indicator (7 days)

We can see that since 2023, the realized profit and loss ratio has been steadily improving, steadily breaking through the balance level of 1.0 in early January.

This week, the ratio reached a new high that is not so exaggerated, indicating that capital inflows have slowed down. If this high point is maintained, there may be market fluctuations similar to the second half of 2019-2020 and 2021.

Figure 5: Realized profit and loss ratio (14 days)

We can also estimate the trend of the entire cryptocurrency market by comparing the “realized market value” of BTC and ETH with the supply of mainstream stablecoins. Using this measure, we can see that most of the capital flows in through the two major cryptocurrencies BTC and ETH, with inflows of $21.9 billion and $18 billion respectively since the beginning of the year.

The total supply of stablecoins has decreased by $10.4 billion, mainly due to the redemption of USDC and BUSD. The above analysis clearly shows the market’s obvious preference for the two major mainstream cryptocurrencies.

Figure 6: Realized market value of other assets

The Bitcoin Market in a Profitable State

SOPR (Spent Output Profit Ratio) is also a useful indicator for tracking the profit and loss scale of the entire market. We usually use this indicator to judge the market state:

  • Loss-dominant state: SOPR persistently below 1.0 indicates that investors are in a loss state and usually sell at the breakeven point (forming price resistance).
  • Profit-dominant state: SOPR persistently above 1.0 indicates that investors are profitable, and the breakeven level is usually considered a short-term value point (forming price support).

Currently, the SOPR indicator is 1.06, indicating a profit-dominant state, which means that Bitcoin trading has achieved an average profit of 6%. This once again has similar characteristics to the periods in 2016 and 2019.

Figure 7: SOPR (7-day moving average)

Considering this, through studying the Bitcoin inflow volume on trading platforms, we found that short-term holders (STH) are the main active group in the market. Out of the daily average inflow of 39,600 BTC on trading platforms, 78% is related to short-term holders.

Figure 8: Inflow on trading platforms related to different groups

When we observe the percentage of Bitcoin held by STH in a profitable state, we understand why STH is considered the main active group in the market – currently, this percentage exceeds 88%. Throughout historical cycles, this percentage is related to the macro upward trend, indicating that the Bitcoin price may continue to rise.

As the price rises, the STH group becomes more likely to sell their held Bitcoin and profit from it.

Figure 9: Percentage of profitable Bitcoin held by STH

On the other hand, the percentage of profitable Bitcoin held by long-term holders (LTH) is not as high, around a little over 73%. This indicates that approximately one-fourth of the Bitcoin held by LTH was acquired at prices higher than $30,000 during the 2021-2022 cycle.

Figure 10: Percentage of profitable supply by long-term holders

Currently, the majority of Bitcoin held by LTH and STH (at least 73%) remains in a profitable state. This indicates the strong recovery in the market since 2023.

Compared to the market weakness experienced after the FTX crash, the current Bitcoin market has shown significant improvement. After the FTX crash, 90% of all Bitcoin trades resulted in losses (the most severe sell-off in history).

Figure 11: Realized losses by LTH/STH (90 days)

The overall realized value (profit plus loss) in the market is still close to the cycle low, at only $290 million per day. Although it seems like a high amount, it is still incomparable to October 2019 and 2020 when the Bitcoin price was 50% lower than now.

This indicates that despite the current market value of Bitcoin being approximately twice as high as before, holders with higher levels of profit and loss are not willing to trade their Bitcoin.

Figure 12: Total Realized Value of STH/LTH

Overall, the majority of Bitcoin holders remain steadfast and continue to hold their Bitcoin without making additional purchases. The proportion of BTC circulating in the market remains very small.

Short-term holders dominate

Typically, it is not common for the purchase price of LTH to be higher than that of STH. However, such events have occurred in previous cycles and are associated with selling activities during deep bear markets. During these periods, even experienced buyers would sell their Bitcoin and exit the market, especially those who bought near the cycle top and experienced the entire downward trend.

With Bitcoin’s strong performance since early 2023 and the strengthened dominance of STH, the SOPR ratio has started to decline for the second time, providing us with a macro perspective on investor behavior reversal. There was a rebound in this indicator in March 2020, rising above 1.0 and then staying below 1.0 for the next two years.

Figure 13: Long-term and short-term SOPR ratio

Summary and Conclusion

Although Bitcoin temporarily reached a new annual high of $31,700, Bitcoin trading remains confined within a narrow price range. The Bollinger Bands are extremely tight, with a difference of only 4.2% between the upper and lower limits, indicating low market volatility and realized value at a low point.

Currently, short-term holders dominate the inflows on trading platforms, with over 88% of Bitcoin in a profitable state. However, from a macro perspective, investors seem reluctant to sell their Bitcoin. Several indicators currently resemble the 2016 and 2019-2020 cycles, both of which were highly volatile markets.