Bitcoin passed $100 billion in "Realized Capitalization," according to a report by crypto data company Coin Metrics.
Realized Capitalization is a metric created by the company to capture the value of a currency as it moves. Traditionally, a cryptocurrency’s value, or market cap, is calculated by simply adding up the price of a currency and multiplying it by the total coins in circulation.
Compared to the market cap of Bitcoin, which currently hovers around $170 billion, that might seem small. But market cap, argues Coin Metrics, isn’t a particularly useful measure. If someone bought at $100 but hasn’t touched the currency in years, it should not be counted in an assessment of a currency’s overall health.
Realized Capitalization then, focuses on the cost invested in buying a cryptocurrency the last time it moved. By using this measure, argues Coin Metrics, you can infer patterns of behavior among Bitcoin HODLers that using other measures simply cannot. In their latest report, that behavior suggests a sizeable group of people who bought Bitcoin when it was being exchanged for around $13,000-$20,000 has already cashed out.
In January last year, “74% of realized cap was composed of coins that were last exchanged when prices were above current market prices,” reads Coin Metrics’ analysis. As of August 25 this year, however, just 52% of coins were valued above market price.
To clarify—that means that people who bought Bitcoin when prices were high have already cashed out and that a large number of people who continue to trade bitcoin today bought their BTC for $3,000-$12,000. According to Coin Metrics, this is a “healthier base” as buyers aren’t looking to dump their cash as soon as the price of Bitcoin rises above a certain level.
That will, in theory at least, make the price of bitcoin more stable, as people won’t dump crypto causing the price to fall. Recent price movements however, would suggest otherwise.