Bitcoin Realized Dominance: The Ultimate Guide for Long-Term Outlooks

Bitcoin has been experiencing a volatile and uncertain period in the past few months. The price of Bitcoin has fluctuated between $30,000 and $50,000 USD, with no clear direction or trend. Many investors and traders are wondering how to assess the market sentiment and find the best entry and exit points.

A new metric, called Bitcoin Realized Dominance, may offer some insights and guidance. This metric is based on the Realized Cap, which is the sum of the market value of each Bitcoin at the time it was last moved. The Realized Cap reflects the actual wealth held by Bitcoin holders, rather than the speculative value based on the current price.

The Bitcoin Realized Dominance is the ratio of the Realized Cap held by short-term holders (STH) to the total Realized Cap. Short-term holders are those who have moved their Bitcoins in the last 155 days, while long-term holders (LTH) are those who have held their Bitcoins for more than 155 days. The Bitcoin Realized Dominance measures the relative strength and influence of STH and LTH in the Bitcoin market.

Source: CryptoQuant

According to the Bitcoin Realized Dominance, the market sentiment can be inferred from the share of STH in the Bitcoin holdings. Historically, during bearish market periods, price bottoms in Bitcoin have occurred when the STH share reached 20-25%. This indicates that most of the STH have sold their Bitcoins, leaving the market dominated by LTH who have stronger conviction and confidence in Bitcoin.

On the other hand, potential market tops have been observed when the STH share peaked at 70-80%. This indicates that most of the LTH have taken profits and sold their Bitcoins, leaving the market vulnerable to STH who have weaker hands and are more likely to panic sell.

As of today, the Bitcoin Realized Dominance is at 35%, which means that the STH hold 35% of the Realized Cap, while the LTH hold 65%. This suggests that the market is in a balanced state, with neither STH nor LTH having a clear advantage. In the long-term perspective, Bitcoin still has significant growth potential, as the STH share is far from the historical highs and lows. However, minor fluctuations are not precisely calculable with this metric, as it does not account for other factors such as supply and demand, institutional adoption, regulation, and innovation.

Therefore, it is advisable to use the Bitcoin Realized Dominance as a complementary tool for long-term outlooks, rather than a definitive indicator for short-term trading. The Bitcoin Realized Dominance can help investors and traders to understand the market dynamics and the behavior of different types of holders, and to identify the optimal market conditions for buying or selling Bitcoin.

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