Bitcoin’s recent bounce above $70,000 is starting to look like more than a rebound in prices. An interesting analysis of on-chain data indicates a shift in how capital moves through the market, with money that previously flowed into stablecoins starting to flow back into Bitcoin.
This change is still small, but it comes as BTC recently hit an intraday high of $73,720 and macroeconomic fears linked to the American-Iranian conflict are evolving.
The defensive phase begins to fade
Bitcoin market structure is telling story of restraint for several months. Capital was set aside and stablecoins gained momentum. Notably, the cap achieved by Bitcoin, a measure of the overall cost of all coins in circulation, plunged deep into negative territory, indicating that the market has absorbed significant unrealized losses.
This cap achieved by Bitcoin is the premise of the capital turnover setup, which was shared in a technical analysis by a crypto analyst named Darkfost.
At the end of February, Bitcoin’s realized cap change fell to around $28.7 billion, one of the signs that cryptocurrency-related capital has shifted to a deeply defensive posture. At the same time, the stablecoin’s market cap increased by over $6 billion, showing that investors were still moving their funds into the crypto market instead of retaining that exposure to Bitcoin. According to the analyst, this was the first time that such a rotation had appeared since the last bear market phase.
However, the the tide can change quietly, and the timing of this change has not gone unnoticed. Darkfost’s updated reading shows that Bitcoin’s realized cap change has returned to around negative $3 billion, while the stablecoin’s capitalization has fallen to around negative $1 billion.
This means that capital that had been put aside seems to be coming out of its shelter and turning to Bitcoin again. This movement is not yet large enough to call it a complete reversal of risk, but it suggests that investor positioning is no longer as defensive as it was just a few weeks ago.
Change in net capital turnover position
Price action and ETF flows support the recovery story
Perhaps the most striking element of this observation is the timing. The first stages of capital re-exposure to Bitcoin began while geopolitical tensions were not fully resolved.
US Spot Bitcoin ETFs received $471.32 million in net inflows on April 6 alone, the strongest day in almost three months, precisely when global markets were absorbing uncertainty of a ceasefire deadline between the United States and Iran. Bitcoin is currently trading near $71,746, after hitting an intraday high of $73,720, keeping it near a sustained recovery during the new week.
If capital continues to flow out of stablecoins and back toward BTC, then the on-chain setup suggests that the recovery may have room to continue.
Featured image from Unsplash, chart from TradingView
Editorial process as Bitcoinist focuses on providing thoroughly researched, accurate and unbiased content. We follow strict sourcing standards and every page undergoes careful review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance and value of our content to our readers.
