Markets
The bullish momentum of the market is running out of steam!
1:07 p.m. ▪ 5 min read ▪ by Evans S.
The dizzying growth of cryptocurrencies has often left investors stunned, always hoping for more gains. However, the current trend is showing signs of slowing, raising questions about the future of the market. Is this a necessary break or the beginning of a turning point?
A crypto market in search of breathing space
Glassnode’s recent report highlights an inescapable reality: demand for mainstream crypto has slowed significantly.
When looking at the “Realized Cap,” an on-chain capitalization model for BTC, it becomes apparent that the value of each coin in circulation is calculated based on the spot price at which it was last moved.
This method helps determine the current cost basis and whether capital is flowing into or out of crypto.
During the last absolute record, the flagship crypto’s realized cap has seen rapid growth, indicating a massive inflow of capital.
Today, the trajectory is less steep and, even if new highs are reached, the increase is significantly more modest.
“Currently, the rate at which new capital is flowing into the Bitcoin network has slowed significantly from its peak as the market digests the recently distributed supply,” says The report.
This deceleration in demand raises questions about the market’s ability to maintain its dynamism.
Signs of a market in transition
Another indicator revealing the current situation is the measurement of net profit made by investors.
When they sell at a profit, the realized cap increases, indicating demand for coins at a higher price. Conversely, when losses are realized, the metric decreases, signaling a reduction in total investment in crypto.
The crypto market absorbed a large amount of profits during the formation of the latest all-time high. Since then, the indicator has cooled, illustrating a decline in demand. This situation could indicate that investors are taking a more cautious approach, waiting for clearer signals before reinjecting capital.
The “escape velocity” theory
Despite this slowdown, some analysts see positive signs for the future. James Checkcryptocurrency analyst, recently used the term “escape velocity” to describe what Bitcoin could do once it hits the price of $73,000.
In astrophysics, escape velocity is the minimum speed necessary for an object to escape the gravitational field of a celestial body without additional propulsion. For Bitcoin, reaching this price could mark the start of an acceleration to new highs.
Check points out that the transition from enthusiasm to euphoria can happen quickly, but the crypto market has not yet reached that point of “euphoric escape velocity.”
“We are still in a regular, stable, enthusiastic, but above all NOT euphoric bullish phase,” he explains. This stability could constitute a solid basis for a future rise in prices, even if resistance is expected in the short term.
Towards a decisive turning point for crypto?
The current dynamics of the crypto market, notably bitcoin, are showing signs of slowing after a period of intense growth. This slowdown could provide a necessary pause, allowing the market to digest recent gains and prepare for a new phase of growth.
However, caution is required. Indicators show falling demand, and while some analysts remain optimistic about a rapid recovery, the reality could be more complex.
The notion of “escape velocity” mentioned by Check offers hope, but investors should remain vigilant against potential short-term resistance.
The crypto market is at a crossroads. Whether this is a temporary pause or the beginning of a watershed moment, only time and future trends will tell. Investors will need to navigate with caution and discernment to seize opportunities while minimizing risks, even if enthusiasm diminishes.
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Evans S.
Fascinated by bitcoin since 2017, Evariste has never stopped researching the subject. If his first interest was in trading, he is now actively trying to understand all the advances centered on cryptocurrencies. As an editor, he aspires to continually deliver high-quality work that reflects the state of the industry as a whole.
DISCLAIMER
The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.