Since November 2022, Bitcoin (BTC) has absorbed an additional $450 billion in capital, bringing its total Realized Cap to $850 billion, according to a recent report by Glassnode. This surge is attributed to Bitcoin's growing role on the global stage, attracting institutions and sovereign entities.
The report highlights the involvement of nation-states in Bitcoin, including Bhutan's large-scale mining operations, El Salvador's adoption of Bitcoin as legal tender, and the US considering Bitcoin as a strategic reserve asset. These developments have contributed to Bitcoin's increasing valuation, surpassing the market caps of silver, Saudi Aramco, and Meta.
Despite ongoing debates about its intrinsic value and utility, Bitcoin has become one of the largest global assets. Its market capitalization has reached $2 trillion, driven by larger capital inflows required to sustain its market growth. The Realized Cap metric, tracking cumulative net capital inflow, underscores Bitcoin's growth.
Bitcoin's dominance within the digital asset ecosystem has increased since the collapse of FTX in November 2022, rising from 38% to 59%. This growth is attributed to institutional investors' preference for Bitcoin, facilitated by US spot Bitcoin exchange-traded funds (ETFs). The report attributes this interest to Bitcoin's inherent scarcity and its role as a hedge against fiat currency debasement.
However, despite favorable market conditions, Google's search interest for Bitcoin has not reached 2021 levels. The investor base is evolving, with retail participants showing more strategic accumulation behavior. The introduction of US spot Bitcoin ETFs has enabled institutional investors to gain exposure, with over $40 billion in net inflows and over $120 billion in combined assets under management within a year of launch.
The Bitcoin investor base has demonstrated resilience during market pullbacks. The current cycle has seen lower realized losses than previous cycles, with the only significant event being the yen-carry unwind on August 5, 2024. The report also highlighted that Bitcoin's drawdowns have been more controlled, with lower realized volatility, unlike past cycles.