The price showed a pattern forming Bitcoin indicator which could mean that the end of the bull cycle may not be far away.
The Guaranteed Cap Bitcoin Investors May Show at the End of the Cycle
In a CryptoQuant Quicktake post, the analyst talked about the historical trend of new income in the Bitcoin sector and what it might suggest in the current cycle.
The on-chain index of correlation here is “Certified Cap,” which measures the total value of a cryptocurrency by assuming that the value of each coin in the supply is equal to the value at which it was last sold on the blockchain.
For any coin, its last transaction may represent the last time it changed hands, so the price at that time can be considered the basis of its current cost. Since Realized Cap sums this value across all supplies, it provides an average of the total amount of money investors have invested in BTC.
Therefore, changes in the index correspond to the amount of income in or out of the market. Another way to visualize this is to look at the trend in Realized Cap for the age groups of smaller coins.
Below is a value-assigned chart showing how the percentage of the total Bitcoin Realized Cap held by the three youngest age groups has changed over the history of the cryptocurrency:
Looks like the metric has been following an overall downwards trajectory over the course of the asset's history | Source: CryptoQuant
From the graph, it can be seen that the combined Bitcoin Realized Cap share of 0 days to 1 day, 1 day to 1 week, and 1 to 1 week age band has increased recently, which means A large number of coins were bought by investors last month.
This naturally indicates an increase in income in the sector. As the analyst highlighted on the chart, BTC has historically seen high inflows that coincide with the price peaks itself. In the last few cycles, this has happened when the Realized Cap of these age groups made up a more significant percentage of the market value than the current one.
This does not mean, however, that the continuation of the Bitcoin bull run is safe. It would appear that the long-term trend in the metric has been one of decline, with each peak occurring at a lower rate than the last.
If the downward trajectory is transferred to the latest cycle, then the cryptocurrency may not have much room to run. It remains to be seen only when a high entry occurs, however, as in the past, there were usually many spikes before the one that led to the end of the cycle.
BTC price
At the time of writing, Bitcoin is floating around $99,100, up more than 6% in the past seven days.
The price of the coin has been gradually climbing up over the last few days | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com