Bitcoin Surges 20% to $112,000 on $4.4 Billion Capital Inflow

Bitcoin has recently achieved a new all-time high (ATH) surpassing $112,000, and on-chain data suggests that this surge is backed by substantial capital inflows rather than mere speculation. The on-chain analytics firm Glassnode highlighted the trend in Bitcoin's "Realized Cap," a capitalization model that calculates the asset's total value by assuming the 'true' value of each coin in circulation is equal to the price at which it was last transacted on the network. This differs from the traditional market cap methodology, where all tokens in the supply are valued at the current Bitcoin spot price.

The Realized Cap model provides a more accurate reflection of the actual capital invested in Bitcoin, as it sums up the value of each coin based on its last transaction price. This metric essentially represents the net cost basis for the entire supply, indicating the total capital that investors have put into the cryptocurrency. In contrast, the market cap reflects the current value that holders are carrying.

During the recent price surge, Bitcoin's market cap saw a significant increase. However, the Realized Cap also rose, indicating real capital inflows. Glassnode noted that the Realized Cap only increases when coins move at higher prices, reflecting actual capital inflows. The data shows that the Bitcoin Realized Cap has been on an upward trajectory, with the latest price surge corresponding to a $4.4 billion inflow into the coin. This substantial capital inflow confirms the conviction behind the move, rather than just speculative markup.

Additionally, the Bitcoin Market Value to Realized Value (MVRV) Ratio is currently around 2.25. This ratio measures the difference between the Bitcoin market cap and the Realized Cap. Historical data shows that Bitcoin has encountered resistance when the MVRV Ratio hits around 2.75. Currently, this level corresponds to a spot price of $130,900, which is expected to be the first selling pressure point. Despite the recent pullback, with Bitcoin's price retreating to $110,900, the overall trend indicates strong capital inflows supporting the cryptocurrency's price movement.