Bitcoin’s Growth and Rising Influence
Since November 2022, Bitcoin has gained about $450 billion in additional value, bringing its total Realized Cap to $850 billion, as reported by Glassnode.
The report highlights that Bitcoin has stayed above $100,000 for several weeks, a major milestone since it first reached $10,000 during the 2017 bull run.
The growth in Bitcoin’s Realized Cap is due to its increasing importance globally, attracting attention from institutions and governments.
Some notable examples include:
- Bhutan, which has started large-scale Bitcoin mining operations.
- El Salvador, where Bitcoin is now legal tender.
- The U.S., which is considering Bitcoin as a strategic asset.
Despite debates about its value, Bitcoin is now one of the world’s largest assets, with a market cap of $2 trillion. It has surpassed silver ($1.8 trillion), Saudi Aramco ($1.8 trillion), and Meta ($1.7 trillion).
As Bitcoin’s value grows, it requires more capital to keep expanding. The Realized Cap metric tracks the net flow of money into Bitcoin, showing its growth. Bitcoin also serves as a decentralized payment system, processing an average of $8.7 billion daily, totaling $3.2 trillion over the past year. This challenges the idea that Bitcoin has no real value.
Bitcoin’s Growing Dominance
After the FTX collapse in November 2022, Bitcoin’s share of the crypto market grew from 38% to 59%. Its market cap jumped 5.3 times, from $363 billion to $1.93 trillion. While altcoins grew 4.7 times, Bitcoin still captured a larger share of new investments.
Institutional investors, especially in the U.S., are increasingly choosing Bitcoin, thanks to Bitcoin ETFs (exchange-traded funds). This interest is driven by Bitcoin’s scarcity and its potential as protection against inflation.
However, despite growing interest from institutions and governments, Bitcoin hasn’t attracted as much new demand as in past cycles.
Changing Investor Behavior
Glassnode notes that demand for Bitcoin now comes in bursts instead of steady flows. Retail investors have become less active compared to the peak in 2021, while larger investors have increased their holdings.
Despite a favorable market, search interest for Bitcoin on Google hasn’t reached 2021 levels. The investor base is shifting, with retail investors being more strategic in their accumulation of Bitcoin.
The launch of U.S. Bitcoin ETFs has allowed institutional investors to easily buy Bitcoin, with over $40 billion in net inflows in the first year. The Bitcoin market has shown resilience, with fewer losses during downturns and more stable price movements compared to previous cycles.
