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,

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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.

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.

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The timing of these shifts is worth noting. Darkfost stated that it began as uncertainties surrounding the Iran conflict reached their peak. 

Bitcoin has gained over 10% since the war began on February 28. For now, the recovery remains modest, but Darkfost suggested that if the rotation continues, the asset’s recovery could continue.

BeInCrypto Markets data showed that BTC gained over 1% over the past day as ceasefire negotiations continue in Pakistan. At press time, the cryptocurrency traded at $72,900.

The post Money Is Rotating Back Into Bitcoin, On-Chain Data Shows appeared first on BeInCrypto.

Source: https://beincrypto.com/bitcoin-liquidity-smart-money-rotation/