Short-term Bitcoin holders (STH) are returning to the market as speculative capital flows in. In a series of posts on platform X on April 29, the on-chain analysis company Glassnode reported a strong increase in 'hot capital' in the Bitcoin market.
Bitcoin witnesses a 'capital rotation wave'
New investors are entering the market as BTC prices hover around the highest levels in months. Glassnode reveals that the total amount of Bitcoin moved in the past week reached the highest level since early February.
'This index reflects the activity of STH and is seen as representative of the speculative capital flowing into the market,' according to Glassnode's explanation.
In just the past week, the amount of 'hot capital' has surged over 90%, reaching nearly $40 billion. Compared to the local bottom at the end of March, 'hot capital' has increased by an additional $21.5 billion, demonstrating a 'capital rotation wave' that reflects a significant shift in market sentiment.
'BTC's hot capital hit a low of $17.5 billion on March 23 – the lowest level since December. In just 5 weeks, this figure has increased by more than $21.5 billion, indicating a rapid shift from a dormant state to speculation from newly entering investors,' Glassnode summarized.
Hot capital is a term that refers to short-term, flexible investment cash flows that can be quickly withdrawn, often used for speculation rather than long-term investment. In Glassnode's analysis, hot capital/hot supply is the total number of coins moved in the last 24 hours and over 1 day–1 week.
Bitcoin's 'hot supply' data | Source: Glassnode
The Bitcoin bull market is gradually returning
According to reports, STH has recently returned to a profitable state as Bitcoin prices fluctuate around $95,000.
However, when analyzing the overall network participation, Glassnode believes that a full recovery of the bull market has not actually occurred yet.
'The first signs of FOMO (fear of missing out) are emerging, with increasing hot capital ratios and profit indicators such as the Profit Ratio (86%) and NUPL (0.53) also rising significantly,' the company wrote in the introduction to the latest 'Market Pulse' report published on April 28.
'However, although on-chain activities such as trading volume and fees are recovering, the number of active daily addresses remains low, indicating that the natural level of participation in the network is still in the process of being reestablished.'
Active Bitcoin addresses (7-day MA) | Source: Glassnode
Earlier this week, several sources reported on the potential danger of 'FOMO' when it comes to a long-term BTC price recovery.
Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.