As Bitcoin experiences a gradual recovery in its price performance, new analysis sheds light on the cryptocurrency’s broader market position.
A CryptoQuant analyst known as “Crazzyblockk” recently shared a detailed analysis to study on Bitcoin’s quarterly performance, focusing on key metrics such as the asset’s market capitalization and realized capitalization.
According to the analyst, examining these metrics on a quarterly basis can offer valuable insights into long-term trends and possible future price movements.
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Current market signals resemble 2021 boom
The analysis highlights how fluctuations in Bitcoin’s market capitalization and realized capitalization signal bullish and bearish trends over time. Market capitalization refers to the total value of all BTC in circulation, while realized capitalization measures value based on the price at which each Bitcoin last moved.
Historically, when market capitalization grows faster than realized capitalization, it often signals the start of selling pressure, leading to bear markets. On the other hand, when the market cap decreases while the realized cap remains stable or increases, Bitcoin tends to find its lowest price, indicating potential buying opportunities.
Crazzyblockk’s analysis compares the current market situation and Bitcoin’s behavior during the 2021 boom. During this period, rapid market capitalization growth led to selling pressureeventually correcting prices.
According to the analyst, Bitcoin is currently in a similar position. Although the market capitalization has seen a notable increase, the realized capitalization continues to increase, indicating the possibility of another major price correction on the horizon.
The analyst’s study also points out that sustained growth in realized capitalization, without corresponding support from market capitalization, tends to trigger corrections as investors realize their profits.
This phenomenon is particularly relevant in current market environmentwhere the price of Bitcoin has risen in recent months but faces challenges in maintaining its upward trajectory. Crazzyblockk warns that a correction may be inevitable if Bitcoin’s market capitalization fails to sustain its current levels.
Bitcoin market performance
Meanwhile, Bitcoin appears to be seeing a cooldown in the positive price performance seen earlier in recent weeks. So far, the asset has increased by almost 10% in the last 14 days, recovering huge highs and even approaching the $70,000 price mark with a high of $69,227 seen yesterday.
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However, Bitcoin’s performance in recent days suggests a slowdown in this price increase. During this period, Bitcoin has fallen below $67,000 with a current trading price of $66,980.
Regardless of this price correction, some analysts remain optimistic. Particularly, a renowned crypto analyst known as Mustache on X recently highlighted in a recent publish that “Bitcoin has exited a falling channel that has existed for more than 7 months”.
The analyst added that this price action is “reminiscent” of 2020, before the rally. Commenting on BTC’s continued decline, the analyst said: “Are bears celebrating a retest? They will be surprised soon.
Featured image created with DALL-E, TradingView chart