Bitcoin Realized Cap Surges As Exchange Supply Dwindles

• The realized cap of Bitcoin has significantly climbed amid the dwindling supply held by exchanges.
• The trend sets the stage for a potential demand shock in the premier crypto asset.

The persisting threat of a global recession continues to linger, fueled by the growing US debt, dollar devaluation, and political unrest. The verbal spat between President Donald Trump and former ally Tesla CEO Elon Musk only exacerbated the market FUD. With that, a legitimate concern arises among investors and industry analysts about whether the bullish thesis for Bitcoin (BTC) and other top-value cryptocurrencies remains viable. However, several technical metrics continue to reinforce the bullish expectation for the premier digital asset.

Increasing Realized Cap of Bitcoin

The realized cap of Bitcoin has been gradually rising since the 2023 bear market based on CryptoQuant. It notably increased from around $379 billion two years ago to over $935.66 billion as of Monday, representing a roughly 146.88% increase between those periods.

Source: CryptoQuant### What does this mean?

The Bitcoin realized cap chart provides a precise actual cost basis of all BTC held by investors. It reflects the total value of the asset in circulation based on the price at which each unit is moved across the blockchain.

ADVERTISEMENTRealized cap is different from market cap. The latter only computes the overall value of all Bitcoin in circulation based on its prevailing price instead of when it was last transacted.

An increase in the metric translates to greater confidence for investors as they are willing to accumulate the crypto asset at higher prices, while coins acquired at cheaper prices are spent to realize profits.

Dwindling BTC Supply in Exchanges

Reinforcing this bullish narrative is the declining supply of Bitcoin held by crypto exchanges. According to Coinglass, the BTC supply available on trading platforms has significantly decreased since the US Securities and Exchange Commission (SEC) approved the trading of spot Bitcoin exchange-traded funds (ETFs) on traditional exchanges.

ADVERTISEMENTThe numbers have decreased from a high of 2.72 million in January last year to a low of 2.09 million today. The numbers indicate a 23.16% slide within the timeframe.

Source: Coinglass### Why does this matter?

Bitcoin’s sinking supply in crypto exchanges means more investors are moving their portfolios to self-custody wallet addresses. Usually, this suggests they prefer to secure their holdings on a long-term basis.

By way of the law of supply and demand, a tightening supply could reduce market liquidity. The scenario would, in turn, translate to a demand squeeze with sustained market interest, which could eventually push prices higher.

Final Thoughts

Wrapping things up, the convergence of these on-chain trends could serve as a solid platform for Bitcoin’s bullish momentum, especially when coupled with optimistic narratives within the crypto space or at the macro level.

ADVERTISEMENT