Money Is Rotating Back Into Bitcoin, On-Chain Data Shows

Bitcoin (BTC) is showing early signs of a liquidity rotation, with on-chain metrics and futures positioning both pointing to a gradual shift in investor behavior. The move comes as BTC’s price has seen a modest recovery amid the conflict between the US, Israel, and Iran. Stablecoin-to-BTC Pipeline Reopens In a post on X (formerly Twitter), analyst Darkfost noted that at the end of February, Bitcoin’s realized cap hit an extreme low of -$28.7 billion. At the same time, stablecoin market capitalization grew to over $6 billion. This reflected defensive positioning by investors looking to preserve capital without fully exiting the market. According to the analyst, “This marked the first time such a rotation had been observed since the previous bear market. At that stage, this configuration signaled a clear intention from investors to protect their capital.” Follow us on X to get the latest news as it happens Capital Rotation Between Stablecoins and Bitcoin. Source: X/Darkfost However, the picture has since shifted. Bitcoin’s realized cap has recovered to -$3 billion. Meanwhile, stablecoin capitalization has declined to -$1 billion. Capital that once sat on the sidelines appears to be flowing back into the largest cryptocurrency. Futures Positioning Mirrors 2023 Pre-Breakout Setup Derivatives data support the optimism. Analyst Michaël van de Poppe noted that speculators are now net long on Bitcoin. “Very similar to previous cases where we’ve seen the same before a big breakout in 2023. Commercials’ Net Position has been net short on the markets, which is the inverse of the speculators,” Poppe said. Bitcoin Commercials and Speculators’ Position. Source: X/Michaël van de Poppe Van de Poppe suggested that BTC could reach $80,000- $85,000. He cautioned, however, that the data points to elevated volatility rather than a guaranteed directional move. “Now, this doesn’t guarantee that we’re going to be breaking upwards massively. It does say that there’s a significant chance ...