#Top Buy-the-Dip Picks

#The Bitcoin bull market cycle has ended - here's why.

There is a concept in on-chain data called realized Cap. Here's how it works: when BTC enters a blockchain wallet, it is considered a "buy", and when it leaves, it is considered a "sell". Using this idea, we can estimate the average cost basis of each wallet. Multiply that by the number of BTC in the pipeline, and you can get the total realized cap. It is generally seen as the total capital that has entered the Bitcoin market through actual on-chain activity.

Market capitalization is based on the last trading price of the exchange. Many people misunderstand this concept. When someone buys BTC worth $10, the market cap does not simply increase by $10. Instead, the price is determined by the balance between buying and selling pressure in the order book.

When selling pressure is low, even small purchases can significantly push up prices—thereby driving up market capitalization. $MSTR has capitalized on this. By issuing convertible bonds and using the proceeds to buy BTC, the paper value of their holdings has grown far beyond the actual capital they deployed.

However, when there is significant selling pressure, even large purchases cannot change the price. There are too many sellers. For example, when Bitcoin was trading around $100k, the market saw a large trading volume, but the price barely moved.

So, how do we determine whether the market capitalization could potentially rise relative to the invested capital? The realized cap shows how much actual funds have entered the market, while the market cap reflects the price response. If the realized cap is increasing but the market cap is stagnating or declining, it means capital is flowing in, but prices are not rising—this is a typical bearish signal. On the other hand, if the realized cap is flat while the market cap is soaring, it indicates that even a small amount of new capital is driving prices up—this is a bullish signal.

Now, we see that former capital is entering the market, but prices are not reacting. This is typical of a bear market.

Some people believe that on-chain data has limitations in capturing all capital flows, but in reality, most major flows are reflected on-chain—whether it is exchange deposits and withdrawals, custodial wallet activities, or ETF-related.

In short: when small capital drives prices up, it's a bull market. When even large capital cannot push prices up, that's a bear market. Current data clearly points to the latter. Selling pressure may ease at any time, but historically, a true reversal takes at least six months—thus a short-term rebound seems unlikely.