Outflows Persist, L2s Shine
Realized Cap Highlights Continued Outflows
Realized capitalization is an important metric we have frequently referenced in prior notes. It values the network based on the price at which each bitcoin was last exchanged. It is a way to calculate the overall cost basis of all $BTC holders and, consequently, is a useful measure of flows into and out of the bitcoin network.
As one might expect, this year has witnessed significant and sustained declines in realized cap as entities that bought towards the market top of the market in 2021 have sold their BTC at a loss, seeking liquidity in other assets. Below we include the 30-day average of the realized P&L metric, which calculates the aggregate gain/loss on bitcoin transactions. When realized P&L moves below zero, we can see that realized cap heads lower.
Below is a more explicit graphical representation of the same realized cap metric. This chart articulates the same observed outflow trend differently – mapping out inflows/outflows on a weekly basis. Understandably, there have been sustained outflows since Q2 of this year.
A couple of things to note on the chart above:
Naturally, most cycles are comprised of a period of outsized inflows followed by outflows. However, using the 2017 b...Reports you may have missed
BTC DECOUPLING FROM EQUITIES Over the past two weeks, BTC has begun to decouple from other risk assets. While the broader macro environment experienced choppy conditions from November 12th through yesterday, BTC has appeared indifferent to fluctuations in risk appetite, continuing its upward momentum and approaching the $100K milestone. A chart of BTC correlations highlights this decoupling, with sharp declines in its correlation to the QQQ, SPX, and IWM. The...
Market Lacks Convincing Signs of Market Froth, Major Demand Side Catalyst for CORE (Core Strategy Rebalance)
FROTH OR REPRICING? A heated debate is unfolding among crypto investors: have we just hit a local top, or will the breakout after eight months of consolidation continue higher through year-end? The crypto market has surged rapidly, as we anticipated, but the key question remains—can this rally sustain itself, or is it nearing exhaustion? Anecdotally, we are seeing renewed interest in crypto from casual observers. Friends and family are once...
TRUMP MAINTAINS A SLIGHT EDGE, BUT IT’S ESSENTIALLY A TOSSUP Well, it's here, folks – the moment that markets have been building up towards since January—the general election to decide the next President of the United States. As our clients know, we have been closely tracking polling and prediction market trends over the past several months, and these have served as a key input in our recommendations. Odds for both...
BTC ETFS SEE MASSIVE INFLOWS: IS CRYPTO NATIVE CAPITAL SIDELINED? BTC ETFs saw over $2.2 billion in net inflows across all spot ETFs from Monday through Wednesday of this week—the largest three-day sum of inflows since the products launched in January—bringing the five-day moving average to north of $500 million. This is certainly impressive and speaks to the explosive breakout we have seen this week. Source: Farside Investors, Fundstrat We've...
