Bitcoin hit a new all-time high (ATH) above the $98,000 mark today, as on-chain data shows that inflows of the cryptocurrency have surged significantly.
Capital flows into the cryptocurrency market now stand at around $63 billion per month
According to the latest weekly report from the on-chain analytics company Vitreous nodethe cryptocurrency sector has witnessed a significant amount of capital infusion recently.
To calculate net flows to the sector as a whole, Glassnode used two metrics: Bitcoin + Ethereum Net Position Change and Stablecoin Net Position Change. The first of these tracks the net changes occurring in the realized cap of BTC and ETH. “Max Realized” is an on-chain capitalization model that considers the last price at which a token was transacted on the blockchain as its “true” value.
Keeping in mind that the previous transaction of any currency was most likely the last point at which it changed hands, the price at that time will indicate the current cost basis. As such, the realized cap is essentially the sum of the cost basis of all tokens in circulating supply.
Thus, one way to interpret the model is to use it as a measure of the amount of capital that Bitcoin and Ethereum investors as a whole have invested in cryptocurrencies. When the achieved maximum changes, capital flows in or out of these currencies. Thus, the BTC+ETH net position change, which tracks these changes, reflects the net USD flows occurring to the top two assets.
Net stablecoin position change, the second relevant metric here, simply measures the net capital inflows of major stablecoins by tracking changes in their combined supply.
The reason there is no need for a realized cap on these assets is that their value remains fixed around the $1 mark; This makes their realized value always equal to market value, which in turn equates to circulating supply with a unit change.
Now, here’s the chart the analytics firm published in the report that shows the trend in 30-day combined value of BTC + ETH and Stablecoin net position change 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
From the chart, it appears that this composite index has seen a sharp rise into positive territory recently, indicating significant net capital inflows into assets.
“Over the past 30 days, total inflows reached a whopping $62.9 billion, with the Bitcoin and Ethereum networks absorbing $53.3 billion, while stablecoin supplies expanded by $9.6 billion,” the report reads.
While these flows do not represent an exact measurement of the cryptocurrency sector as a whole, they serve as a good rough estimate since most of the capital that flows into the market does so through Bitcoin, Ethereum, and stablecoins. Only after rotation from these major assets do altcoins get their fuel.
Bitcoin price
Bitcoin rose to nearly $98,400 earlier in the day, but its price has since seen a decline and is now down to $97,100.
Looks like the price of the coin has been marching up recently | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, chart from TradingView.com