Bitcoin Inflow Slowdown: CryptoQuant Founder Says Sentiment Could Take Months To Recover

Overview

Recent insights from Ki Young Ju, the founder and CEO of the on-chain analytics firm CryptoQuant, have shed light on a significant slowdown in Bitcoin’s on-chain capital inflows. This decline marks a notable shift in sentiment surrounding Bitcoin, which has implications for investor behavior and market dynamics.

Bitcoin’s On-Chain Capital Inflows Stagnate

In a post shared on X, Ki Young Ju highlighted that Bitcoin’s on-chain capital inflows have weakened over the past couple of months. After approximately 2.5 years of consistent growth, the realized cap of Bitcoin has seen a stall. The term “Realized Cap” refers to an on-chain capitalization model that calculates Bitcoin’s total value based on the price at which each coin was last transacted. Essentially, it reflects the cost basis of the entire Bitcoin supply, indicating the capital that investors utilized to purchase their tokens.

The observed decline in capital inflows suggests a downturn in sentiment among Bitcoin investors. This shift is further corroborated by the PnL Index from CryptoQuant, which synthesizes key on-chain indicators to provide a comprehensive valuation metric for Bitcoin. The PnL Index incorporates the MVRV Ratio, NUPL, and STH/LTH SOPR, which collectively analyze unrealized profits or losses among investors and their profit-taking behaviors.

Young Ju presented a chart illustrating the trend of the 365-day moving average (MA) of the Bitcoin PnL Index throughout the asset’s history. The chart indicates that the Bitcoin PnL Index reached a high earlier in the year, suggesting that Bitcoin may have been overvalued at that time. Since then, the index has experienced a downward trend. Although the current value of the index remains positive, indicating that Bitcoin might still be in a bullish phase, historical patterns show that such drawdowns can often precede bear markets. There have been exceptions to this trend, notably following the COVID crash and the early months of 2025.

Despite the current positive value of the PnL Index, there are no signs indicating a reversal back to the upside. Young Ju acknowledged that sentiment recovery could take several months, highlighting the potential for a prolonged period of subdued investor enthusiasm.

From author

The insights provided by Ki Young Ju reflect a critical juncture for Bitcoin, as the dynamics of investor sentiment play a crucial role in shaping market trends. The interplay between capital inflows and the PnL Index serves as a valuable barometer for gauging the overall health of the Bitcoin market. Understanding these indicators can provide investors with a clearer picture of potential future movements, particularly in light of historical patterns.

Impact on the crypto market

• The slowdown in Bitcoin’s on-chain capital inflows may signal a shift in investor sentiment, which could lead to cautious trading behavior.
• The decline in the PnL Index suggests that while Bitcoin might still be in a bullish phase, the potential for a market correction exists.
• Historical trends indicate that drawdowns in the PnL Index often precede bear markets, warranting close monitoring of future developments.
• The absence of a turnaround in the PnL Index may further dampen enthusiasm among investors, impacting trading volumes and overall market activity.
• Observing the correlation between realized cap and investor sentiment could provide valuable insights into future market directions.