Bitcoin has remained stable above $66,000; however, its value has decreased by approximately 30% over the last month. According to analysis from Alphractal, for the first time in three years, Bitcoin’s Realized Cap Impulse (Long-Term) has turned negative.

When this indicator has registered negative values in previous cycles, Bitcoin has historically entered prolonged downturns, as long-term capital inflows diminished.

Bitcoin’s Capital Structure

The Realized Cap Impulse serves to track changes in Bitcoin’s realized capitalization over extensive timeframes, assessing whether new capital is entering the ecosystem or if inflows are tapering or retreating. A negative signal indicates a reduction or stagnation in capital inflows, creating a supply-demand imbalance within the network. Alphractal further explained that historical trends show every occurrence of a negative Realized Cap Impulse has preceded significant market corrections or extended bear markets.

In its detailed analysis, Alphractal emphasized that a continued decline in new capital inflows, alongside an available supply, often leads to downward pressures on Bitcoin’s price. This understanding is distinct from traditional market cap calculations as it values Bitcoin at the price it last changed hands on-chain, thus reflecting actual investments rather than price fluctuations. By discounting transient market fluctuations, the indicator emphasizes long-term capital trends.

With the Realized Cap Impulse now registering negative for the first time in three years, it denotes a potential shift towards structural weakening of capital inflows.

Additionally, Joao Wedson, founder of Alphractal, stated that even though ETFs are accumulating and institutions like Strategy are increasing their positions, it still does not offset the oversupply in the market compared to demand.

Global Uncertainty

The latest on-chain capital trends emerge amidst a broader global context fraught with uncertainty. The Global Uncertainty Index, according to CryptoQuant, has reached unprecedented levels, surpassing those during historic events like the 9/11 attacks, the Iraq War, and the 2008 financial crisis. This spike suggests that markets are struggling for direction, and investors are now approaching the market with heightened caution.

Periods of significant uncertainty often correlate with dramatic shifts in market positioning as investors reassess their risks. While uncertainty generally invites defensive strategies, it may also prompt substantial repositioning among market participants.