The BTC network has nearly reach a full detox.

The BTC network has nearly reach a full detox.   Bitcoin Mining Outlook, https://youtu.be/8W6fSZSo_vY.

Realized capitalization (realized cap) is a variation of market capitalization that values each UTXO based on the price when it was last moved, as opposed to its current value. As such, it represents the realized value of all the coins in the network, as opposed to their market value.

In the wake of one of the largest deleveraging events in digital asset history, the Bitcoin Realized Cap has declined such that all capital inflows since May 2021 have now been flushed out.

We can then compare the current BTC cycle to all previous major bear markets, measuring from Realized Cap peak to trough, as a gauge for relative capital outflows: 2010-11 saw a net capital outflow equivalent to 24% of the peak.  2014-15 experienced the lowest, yet non-trivial capital outflow of 14%.  2017-18 recorded a 16.5% decline in Realized Cap, the closest to the current cycle of 17.0%.

By this measure, the current cycle has seen the third-largest relative outflow of capital and has now eclipsed the 2018 cycle, which is arguably the most relevant mature market analog.

In conclusion, it is evident that the level of realized financial pain across Bitcoin market participants throughout the last 6 months has been nothing short of staggering, however, the severity of losses does appear to be diminishing over recent weeks.

We can also note a positive shift in character for both network activity and the demand for blockspace. This shift in structure is not however supported by rising transfer volumes, which continue to languish at cycle lows, and suggest an elevated level of retail-sized participation.

A rare, but informative market structure is also present, whereby there is a degree of homogeneity amongst acquisition prices across all Bitcoin cohorts. This allows market analysts to assess the entire Bitcoin market as having a similar perception of risk vs opportunity, and a similar stance with regard to their profitability.

San Jose Costa Rica, December 6, 2022, Rafael Alberto Vilagut, alberto.doer@gmail.com.