The Daily Dive #123 - Realized Price Update

Realized Price

A key metric covered extensively in the Deep Dive is realized price. Realized price directly tracks bitcoin’s monetization process showing when new demand is acquiring bitcoin at higher prices. It acts as a price floor with the bitcoin price rarely sustaining below it. 

The current state of realized price signals an accumulation or pre-parabolic phase defined by a plateau or slight uptrend. 

But when considering this current ranging and consolidation phase throughout December 2021 and the amount of capital inflow it would require to see realized price rise in a steep fashion, bitcoin requires a significant demand catalyst for another parabolic move.

To track new demand flowing in, we can look at the realized price rate of change across the last 30 days and seven days to gauge short-term momentum. Realized price accelerates with each rise to new all-time highs. Currently, there’s little momentum to show new demand flowing in. 

The realized price rate of change over the last seven days along with the last 30 days is near zero, showing that on-chain realized losses have been mitigating any capital inflows as of late. 

We are tracking new demand flowing in from institutional buyers, which has been neutral over the last 30 days. As institutions take profits into December, we’re looking for indicators and data to show that institution demand picks back up for bitcoin in Q1 as positions are rebalanced and bitcoin adoption continues its exponential trend. The below chart shows bitcoin denominated inflows to various global, bitcoin investment vehicles.

Source: ByteTree

Without this institutional catalyst, we expect the bitcoin price to continue ranging or gradually grind upward as retail accumulates, barring a macro deflationary shock. In the scenario where a macro deflationary shock occurs, liquidity dries up and risk-on assets sell off violently, we expect that to be a long-term generational buying opportunity for bitcoin. 

As the realized price all-time chart shows, bitcoin currently is in the plateau/slight uptrend phase of realized price growth, which has always predated the steep uptrend phase of realized price movement.