Bitcoin Realized Price Moves Further Away From Market Value – Bearish Signal Or Not?

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Bitcoin declined by 1.83% in the past week pushing its market price to below $97,000. Despite this loss, market sentiments on premier cryptocurrency remain highly bullish amidst a 61% price gain that stretches to early October. However, Bitcoin’s impressive ascent to new points over the past few weeks has resulted in potentially bearish market developments. Related Reading Bitcoin Price Bounces Back: Will the Climb Continue? 3 days ago Bitcoin Realized Price Up ‘Only’ $37,000 Amidst Charge To $100,000

In a Quicktake post on CryptoQuant, an analyst with username Grizzly shared an intriguing insight on Bitcoin’s realized price following the asset’s recent price surge.  According to Grizzly, as Bitcoin moved from $60,000 to almost $100,000in the past two months, its realized price only rose from $31,000-$32,000 to $37,000 indicating a widening gap between both values which produces multiple implications.

For context, realized price means the average price at which all Bitcoin in circulation was purchased, effectively representing the aggregate cost basis of all holders. It is often applied in investor behavior analysis as well as identifying market cycles. 

A rise in realized price is generally a positive development which indicates heightened capital inflows as new investors are purchasing Bitcoin at elevated price levels.  Furthermore, an increased realized price also signals a reduced selling pressure from long-term holders despite significant price gains which is a strong representation of market confidence. 

However, Grizzly explains that a widening gap between market price and realized price as presently seen traditionally signals short-term overheating that indicates an unsustainable price growth driven by speculation with no underlying fundamentals.  Albeit, the analyst also highlights that historical data has shown Bitcoin to witness similar widening gaps in previous bull seasons with sustained price growth. This phenomenon can be attributed to the rapid price appreciation recorded in a typical bull run. 

Therefore, the current widening gap between Bitcoin’s realized price and market price may likely bear no influence on the asset’s present bullish trajectory.  Source: CryptoQuant Related Reading Is $135,000 Bitcoin’s Current Ceiling? This Model Says So 1 week ago BTC Records Largest Exchange Withdrawal In Two Years

In other news, the crypto community has now experienced the highest outflow of Bitcoin from exchanges since December 2022. According to the team at CryptoOnChain, this development strongly signifies that BTC’s bullish rally has much room to run. Source: CryptoQuant

At press time, the crypto market leader is valued at $96,468 following a 0.08% decline in the past day. However, Bitcoin remains in profit on larger time frames as evidenced by a 38.22% gain in the past thirty days. With a market cap of $1.91 trillion, the premier cryptocurrency remains the largest digital asset accounting for 55.9% of the total crypto market. BTC trading at $96,471 on the daily chart | Source: BTCUSDT chart on Tradingview.com Featured image from Business Standard, chart from Tradingview