Bitcoin SoV Thesis Gains Traction – Metrics Reveal $1.03 Trillion Now Held On The Network

Bitcoin continues to demonstrate resilience, holding above crucial demand levels after its recent decline from all-time highs. While the market grapples with negative sentiment and a wave of bearish predictions, BTC price action remains steady, offering hope to investors eyeing a potential recovery.

Adding weight to Bitcoin’s strength, CryptoQuant CEO recently shared compelling data that combines off-chain and on-chain metrics. The analysis reveals that the estimated capital stored on the Bitcoin network has surged to $1.03 trillion. This substantial increase underscores the narrative of BTC as a robust store of value, aligning with the thesis many analysts advocate for the leading cryptocurrency.

As macroeconomic uncertainty looms, Bitcoin’s ability to maintain its position above critical levels offers a sense of stability to a market otherwise marked by volatility. Investors and traders are closely monitoring whether this newfound support will translate into a rally or if broader market forces will weigh BTC down further. For now, the data suggests that BTC’s foundation remains strong, fueling continued confidence in its long-term potential as a digital store of value.

Capital Stored On The Bitcoin Network Grows

Bitcoin has had an incredible 2024, with its performance not just reflected in price appreciation but also in key metrics that indicate the network’s growing strength. As the year draws to a close, data suggests that Bitcoin’s role as a Store of Value (SoV) is more evident than ever.

CryptoQuant CEO Ki Young Ju recently shared valuable insights on X, revealing that by combining both off-chain and on-chain data, the estimated capital stored on the Bitcoin network has reached $1.03 trillion, an 85% increase from the previous year.

This growth supports the idea that BTC is increasingly seen as a long-term store of wealth, beyond mere speculation. Ju explains that this is not just about the market cap, which currently stands at $2 trillion. Adding $1 to BTC does not directly translate to a $1 increase in its market cap. Instead, we can estimate the capital inflow through a combination of off-chain and on-chain data.

First, off-chain exchange transactions are considered, where exchange reserves are multiplied by the volume-weighted average price (VWAP) to estimate capital entering the market via exchanges. Second, on-chain data, particularly OTC and exchange deposits/withdrawals, is used. Bitcoin’s execution and settlement occur simultaneously, and capital inflows can be tracked through the realized cap, which monitors the cost basis of BTC movements on the blockchain.

By combining these metrics, we arrive at the SoV Index, a tool that captures the true capital flowing into the Bitcoin network. This provides a clearer picture of BTC’s value and its growing status as a global store of value, with data backing up its fundamental strength heading into 2025.

BTC Ranging Between Crucial Levels

Bitcoin is currently trading at $93,600 after facing several days of selling pressure and fear in the market. The price reached a high of $99,880 last Thursday, but since then, it has dropped by more than 6%. This recent decline has raised concerns about Bitcoin’s immediate price action, but the key levels to watch are clear.

If BTC manages to break above the $100K mark and hold it as support, it would signal a bullish confirmation, potentially paving the way for a new price rally. This level is psychologically significant and would reinforce the uptrend if sustained.

On the other hand, if bulls lose the critical support range around $92K to $90K, the market could see a deeper correction. A move below this support would likely trigger further selling, potentially testing lower levels in the near future.

These levels will likely determine Bitcoin’s short-term direction. With the market still reacting to external factors, keeping an eye on these key zones will be essential for understanding where Bitcoin is headed next.

Featured image from Dall-E, chart from TradingView