Bitcoin Capital Inflows Plunge, Raising Red Flag for Prolonged Bear Market

▲ Bitcoin (BTC), decline, bear market / ChatGPT-generated image

A key indicator reflecting the structural growth of the Bitcoin (BTC) network has turned negative for the first time in three years, flashing a strong warning signal of a potential entry into a prolonged bear market.

According to cryptocurrency media outlet CryptoPotato on February 13 (local time), analytics firm Alphractal reported that Bitcoin’s Long-Term Realized Cap Impulse indicator has entered negative territory for the first time in three years. This marks the first occurrence since 2021, and historically, whenever this signal appeared, Bitcoin unfailingly faced either an extended price correction or a severe bear market.

Realized capitalization calculates value based on the price at which each Bitcoin last moved on-chain, and is considered a more accurate measure of actual capital inflows into the network than simple market capitalization. A negative shift in this indicator’s impulse suggests that new capital inflows have effectively stalled or slowed, signaling that the market has entered a structural contraction phase where demand can no longer absorb supply.

Joao Wedson, founder of Alphractal, stated, “Despite capital inflows through spot Bitcoin ETFs and continued accumulation by large institutions such as MicroStrategy (Strategy), it is not enough to resolve the current imbalance where supply exceeds demand.” He explained that as structural weakening in capital inflows begins, downward price pressure could intensify in earnest.

Macroeconomic uncertainty is also weighing on the market. According to on-chain data analytics firm CryptoQuant, the current global uncertainty index has reached an all-time high, surpassing levels seen during the 9/11 attacks, the 2008 financial crisis, and the COVID-19 pandemic. With geopolitical crises and economic instability overlapping, investors are significantly reducing exposure to risk assets, leading to liquidity depletion in the Bitcoin market.

Bitcoin is currently attempting to establish support around the $66,000 level, but investor sentiment has cooled sharply after recording an approximately 30% decline over the past month. Experts advise that given the confirmed structural shift in capital inflows, investors should focus on long-term market fundamentals rather than expecting a short-term rebound. High volatility may become a persistent market characteristic rather than a temporary phenomenon, calling for a cautious approach from investors.

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