This Bitcoin realized cap is the premise of the capital rotation setup, which was shared in a technical analysis by a crypto analyst that goes by the name Darkfost.
At the end of February, Bitcoin’s realized cap change fell to about negative $28.7 billion, which is one of the signs that capital tied to the cryptocurrency had moved into a deeply defensive posture. At the same time, stablecoin market capitalization grew by more than $6 billion, showing that investors were moving funds still in the crypto market instead of keeping that exposure in Bitcoin. According to the analyst, it was the first time this kind of rotation had appeared since the last bear-market phase.
This means that capital that had been parked on the sidelines appears to be moving back out of shelter and into Bitcoin again. The move is not large enough yet to call it a full risk-on reversal, but it does suggest that investor positioning is no longer as defensive as it was just weeks ago.
Perhaps the most striking element of this observation is the timing. The early stages of capital re-exposure to Bitcoin began when geopolitical tensions had not been fully resolved.
If capital keeps rotating out of stablecoins and back into BTC, then the on-chain setup suggests the recovery rally may have room to continue.
Featured image from Unsplash, chart from TradingView
