Ki Young Ju, CEO of cryptocurrency analytics firm CryptoQuant, recently suggested that the bull cycle in the Bitcoin market is over. In his assessment based on on-chain data, Ju stated that current market dynamics now point to a bear market.
In his explanation, Ju first drew attention to the concept of “Realized Cap”. This metric considers Bitcoin entering a wallet as a purchase and its exit as a sale. This data, which allows the calculation of the average cost per wallet, offers the opportunity to measure the real capital entering the market when multiplied by the amount of BTC in wallets. Therefore, Realized Cap represents the total capital entering Bitcoin through on-chain activities.
Market cap, on the other hand, is often misunderstood because it is based solely on the last trading price on exchanges. Ju emphasized that even a small purchase can significantly push prices up during periods of low selling pressure, but under high selling pressure, even large purchases are insufficient to move the price. As an example, he cited the period when Bitcoin was trading close to $100,000, when the price remained stable despite high volume transactions.
According to Ju’s analysis, in order to understand whether the market is in a healthy upward trend, it is necessary to look at the relationship between Realized Cap and Market Cap. If Realized Cap is increasing while Market Cap is stable or decreasing, this indicates that prices are not rising despite new capital inflows, meaning a bear market is dominant. In the opposite case, if prices are rising with small capital inflows, this is considered a sign of a bull market.
Ju, who stated that the currently observed data clearly points to the first situation, said that large capital inflows could not push prices up and that this situation is a classic bear market indicator. The CEO said that the selling pressure may decrease at some point, but historically, such market reversals last at least six months, so expecting a short-term rally is unrealistic.
*This is not investment advice.
