The on-chain index data would suggest that Bitcoin is currently not at a stage where its value would be more vulnerable to a correction.
Bitcoin’s 365-Day Growth Rate Sits Below Historic Hot Spot
In a post on X, CryptoQuant writer Axel Adler Jr discussed the recent trend of Bitcoin’s “Growth Rate” metric. The Growth Rate basically keeps track of the difference between the changes in Bitcoin Market Cap and Realized Cap.
Market Cap here is naturally just a simple estimate of the total circulating supply of the cryptocurrency at the current price. Realized Cap, on the other hand, is more complicated.
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Realized Cap is an on-chain asset capitalization model that takes the “real” value of any circulating coin to match the value at which it was last transferred to the blockchain.
Since the last sale of any coin was probably the last time it changed hands, the value at the time will serve as the basis for its current cost. Since the Realized Cap combines this price for all asset tokens, it calculates the total cost base of each coin in the circulating supply.
In other words, Realized Cap measures the amount of money that investors use to buy their Bitcoin. Changes in Realized Cap, therefore, will represent the income or outflow of money that occurs with the cryptocurrency.
Since the Growth Rate tracks how changes in Realized Cap are reflected in Market Cap, it basically tells us how the market is performing in cash flow.
Now, here’s a chart showing the trend in the 365-day moving average (MA) of Bitcoin’s growth rate over the last decade or so:
As seen in the graph above, the 365-day MA Bitcoin Growth Rate has been at positive levels since early 2023. If the index has green values, it means that the Market Cap is growing at a faster rate than the Realized Cap.
Currently, the index is sitting at the 0.001 mark, which is a very high level. Therefore, it seems that the influx of cash has pushed the price up recently.
Historically, during bullish periods in the market, when Market Cap has exploded relative to Realized Cap, tops are more likely to occur.
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From the chart, it is clear, however, that the recent levels of the metric, although high, were less than 0.002 mark above the correction in the past.
The Bitcoin all-time high (ATH) back in March, which has continued to be the high of this session so far, also occurred when the Growth Rate had risen above this level.
BTC price
Bitcoin fell below the $67,000 mark yesterday, but the asset has since seen a push for recovery that has brought its price back above $69,300.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
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