On-chain data shows the Bitcoin Realized Cap has set a new all-time high (ATH) as capital has been flowing into the coin at unprecedented rates.

In its latest weekly report, the on-chain analytics firm Glassnode has discussed the trend that has recently been taking place in the “Realized Cap” of Bitcoin.

The Realized Cap here refers to a capitalization model for the cryptocurrency that calculates the total value of the asset by assuming the value of individual coins in circulation to be the same as the price at which they were last transferred on the blockchain rather than the current spot price.

Considering that the last time a coin was transferred on the blockchain was likely the latest instance of it changing hands (that is, a sale of it took place), the Realized Cap would essentially be taking into account the cost basis of all coins in circulation.

As such, one way to interpret the model is that it tells us about the total amount of capital that the investors have used to purchase their Bitcoin.

Now, here is a chart that shows the trend in the BTC Realized Cap over the last few years:

From the graph, it’s visible that the Bitcoin Realized Cap has been sharply rising recently and setting new ATHs. This uptrend in the indicator has come as the price of the asset itself has also rallied.

The reason behind the trend in the Realized Cap is naturally that investors have become more active in trading as the price has shot up. Old hands would be moving their coins to harvest their profits, thus resetting the cost basis of their coins to the current high price levels.

“As these coins change hands, we can also consider this to be an injection of fresh demand and liquidity into the asset class,” notes the analytics firm. As the chart shows, the 2021 bull run also saw capital rushing into the asset, with the indicator exploring fresh highs over an extended period.

Recently, the Bitcoin Realized Cap has managed to break through the $540 billion level, with the metric’s value witnessing a monthly growth rate of $79 billion.

This extraordinary rate of capital inflows is unprecedented for the asset. The likely explanation behind this pattern may be the presence of the Bitcoin spot exchange-traded funds (ETFs) in this bull run.

Spot ETFs, which provide a more traditional mode of investment in cryptocurrency, only received approval in January. Since then, these funds have continuously absorbed the BTC supply.

With this explosive demand that never existed before in the history of the asset, it’s no wonder that the Realized Cap has also been climbing at an unprecedented rate.

Bitcoin has experienced a notable drawdown over the past couple of days, as its price is now trading around the $66,100 level.

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