Bitcoin Market Insights

Currently, Bitcoin’s on-chain data presents an intriguing mix of solid gains among different holder groups, a rise in realized market capitalization, and unprecedented network hash rates. Yet, there’s a noticeable absence of the excitement typically seen in the latter stages of bull markets. Here are some key observations from Ki Young Ju, CEO of CryptoQuant, as he dissects cost bases, profitability among cohorts, leverage trends, and the changing influence of ETFs and corporate treasuries.

Is the Bitcoin Bull Market Over?

The statistics are quite revealing. Ju notes that “the average cost base for Bitcoin wallets sits at $55,900, indicating that holders have seen an approximate 93% increase.” Furthermore, realized market capitalization has surged by roughly $8 billion this week, suggesting “on-chain inflows are still strong.” Realized caps, which measure a coin’s value at its last traded price instead of its current market price, traditionally reflect a more stable form of money. The ongoing increase indicates that new higher cost standards are being established on the chain, despite stagnation in the spot price.

But why aren’t prices following suit? Ju suggests, “The rise in prices isn’t due to weak demand, but rather to selling pressure.” This suggests a market dynamic where liquidity providers and profitable groups are distributing power while taking profits, which may help explain why there are healthy inflows but flat prices around $110,000—current market print, as cited by Ju.

It’s crucial to assess where the new demand is arising and where it might be slowing. Ju points out that “new inflows mainly come from ETFs and Bitcoin treasury companies, while CEX traders and miners have maintained profits about double that.” He describes the estimated cost base and market standing for various cohorts: “ETF/Custodial Wallet: $112,000 (-1%), Binance Trader: $56,000 (+96%), Miner: $56,000 (+96%), Long-Term Whales: $43,000 (+155%).” With the current price at $110,000, it appears that institutional investors with shorter holding periods are around break-even, while those with longer tenures retain substantial profits. This scenario helps mitigate forced selling at peaks but also dampens the new momentum typically fueled by proactive buying.

Ju further explains that during bullish trends, market capitalization generally exceeds the realized ceiling, with a widening “valuation multiplier.” “The greater the disparity between market capitalization and realized cap growth rates, the stronger the indicated valuation multiplier,” he adds.

He mentions that “approximately $1 trillion in on-chain inflows have pushed market capitalization to $2 trillion.” A moderate gap here can signal a balanced market—neither excessively bubbly nor sufficiently robust to conclude the cycle. Ju also observes that “whales’ unrealized gains aren’t extreme,” leading to two interpretations: either the hype hasn’t begun, indicating we’re still far from euphoria, or “this time, it’s different; the market is too large for extreme profit margins.”

Further analysis reveals that there has been a significant drop in BTC flowing from spot to futures exchanges. Ju noted this could imply “whales are less aggressive in opening new long positions with BTC as collateral.” If marginal longs cease to pledge their assets, the market might lack a fundamental source of strength from collateralized positioning. Yet, leverage levels have not reset. “Despite recent wipeouts, Bitcoin’s PERP leverage remains high,” Ju asserts, referencing ratios tied to exchange USDT balances and BTC-USDT perpetual open interest compared to USDT’s market cap.

In essence, while the collateral weight of long positions in BTC seems to have lessened, the overall leverage across the system remains elevated compared to two years prior. The resulting combination might stifle clear trends: fewer collateralized longs could limit upward movement, while sufficient leverage in the system might induce volatile liquidations.

Hashrate and supply trends add another layer of complexity. “Bitcoin’s hashrate keeps breaking records, currently around 5.96 million ASICs online. Public mining operations are not shrinking, indicating a bullish long-term view,” Ju notes.

Stimulating New Demand

Currently, demand appears to be driven by two main channels: ETFs and strategies, both of which have experienced a slowdown in buying. “Once these two channels pick up again, we could see a return of market momentum,” he states. This is a clearly testable hypothesis; if these significant conduits reaccelerate, we might expect some buoyancy in spot prices. Should the market remain liquid, the realized cap could further climb with steady inflows while prices might gradually fall due to distribution absorbing the flow.

Looking at cohort profitability provides additional context. Over the past six months, short-term whales, particularly ETFs, are nearing breakeven, whereas long-term holders are up roughly 53%. Historically, this phenomenon occurs at the cycle’s peak when dominant cohorts’ unrealized gains are significant, inducing structural selling pressure when modest gains yield larger profits.

Ju effectively conveys that we’re not quite at that stage yet. Nonetheless, he cautions that market behaviors may now diverge from traditional four-year cycles of accumulation and distribution between retail investors and whales. “It’s increasingly difficult to predict new liquidity flows, making it unlikely that Bitcoin will adhere to the same cyclical patterns again,” he posits.

In summary, this analysis presents a market defined by three key characteristics: First, “capital inflows” fundamentals seem resilient, with rising realized caps, broad holder gains, and peak network security. Second, the market microstructure appears subtly unsettling, as fewer whales place BTC-backed longs, while systemic leverage remains elevated enough to disrupt straightforward price movements. Lastly, the demand focus is primarily concentrated on ETFs and corporate finance channels, which have recently slowed; their renewed activity could be crucial in reigniting market momentum.

As of now, BTC is trading at $107,609.