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Capital flows into bitcoin like never before (and sustains price in the long run)

Key facts:

Investors who bought assets months ago have already guaranteed a return of 150% on their capital.

For analyst Willy Woo, the current upturn is more organic than the previous one.

Data displayed by analyst Willy Woo indicates that the flow of capital entering the bitcoin market is at its highest rate. It is an organic movement that is correlated with the price of the cryptocurrency. Therefore, it may be a sign that the current bull run is sustainable over time.

In a tweet posted Sunday, Woo commented that the flow of capital into bitcoin is at its highest rate. It even beats the last bull market that occurred last year when the price of the cryptocurrency jumped from $ 4,000 to $ 14,000.

Woo’s conclusions are based on the interpretation of the realized price indicator. A metric, invented by the data firm CoinMetrics, used to calculate the circulating supply of coins available in the market, based on the price bitcoin was when the funds last moved.

In other words, the realized price of bitcoin is an approximation of what the entire market paid for its coins. The metric excludes balances that have not been moved for a long time, thereby trying to provide a more reliable picture of the overall network by discounting coins that are not in active circulation.

Data provided by the analysis firm Glassnode indicates that the realized price of bitcoin reached its all-time high on November 15, when it registered a value of USD 6,903 per coin. This would be the average price paid by most users who have invested in bitcoin during 2020.

According to data from the CoinMarketCap site, the last time the price of bitcoin reached $ 6,900 was at the end of April. It means that, if these users decide to sell their assets right now, would obtain a return of 150%, taking into account that the value of the cryptocurrency is USD 17,797, at the time of writing this article. To achieve such a profit margin, an investor had to wait at least 7 months.

Bitcoin launches good long-term signals

Woo adds that the rate of return on capital stored in bitcoin that is currently being recorded is “More organic” than that recorded during last year’s bull rally. From their perspective, the indicative is optimistic because a greater inflow of capital to bitcoin also means greater sustainability of the long-term price rally.

Investment bitcoin users buy

Investment bitcoin users buy

For analyst Willy Woo, the current bullish run in the price of bitcoin is organic because it is correlated with higher capital inflow to the market by investors. Source: @ woonomic / Twitter.

In another message, the analyst added that bitcoin is the world’s first risk haven. This means that increases during traditional boom cycles as evidenced by its adoption curve. It also increases when investors flock to seek safe havens, which is due to the technical design of digital scarcity that the pioneering cryptocurrency is focused on.

Also, for Woo there are currently several reasons to be optimistic about the price of the cryptocurrency based on the long term. According to him, this is due to the increase in the amount of bitcoins that users are withdrawing from exchanges to store them in their own wallets, as well as the increase in new users who remain active on the network.

Also noteworthy is the growing institutional participation and adoption of bitcoin that has recently manifested itself by billionaire investors, mutual fund managers like Grayscale, banking institutions and prominent personalities, as reported by CriptoNoticias.