The “delta capitalization” model of Bitcoin may suggest that around $15k could be a possible bottom for the crypto’s price.
Previous Delta Cap Trend: Bitcoin Might Still Fail to Face More Decrease Before A Bottom
According to a CryptoQuant analyst, although the market cap for Bitcoin is lower than the actual cap, it’s still higher than the delta cap.
Before taking a look at the data, it’s best to first get a basic grasp of the three major capitalization models for Bitcoin.
You can calculate the normal market cap by simply taking all coins in circulation, multiplying that number by BTC’s current price.
The “realized cap” works a bit differently; instead of multiplying all the coins by the same price, this model weighs each coin by the price it was last moved at.
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The normal market cap for Bitcoin is $38k if 2 BTC are in circulation at $19k. The realized cap, however, would only be $34k if the price of one coin was $15k at the time and $19k for the other.
Now, the Bitcoin “delta cap” is defined as the difference between the realized cap and the average of the market cap. The average of the normal market cap here is taken over the entire history of the crypto (and it’s naturally a moving average).
The chart below shows the trends in different market caps of BTC.
At this moment the market cap appears to still be greater than the delta. Source: CryptoQuant| Source: CryptoQuant
You can see that Bitcoin market capital has fallen below realized caps in recent months. It has not fallen far enough to reach the delta cap.
The market cap between these two caps has historically been the lowest point at which the crypto’s value has fallen.
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After the realized market cap dropped slightly to 2020, the coin hit its lowest point. In 2018, however, the value of the metric fell a bit lower than the delta limit before hitting the bottom.
This past trend may suggest that the point around the delta cap may be the possible lower bound for how deep the coin’s price can sink. If this is true, Bitcoin may sink to $15k or less, just before the current caps touch the bottom forms and the delta caps.
BTC price
At the time of writing, Bitcoin’s price floats around $19.3k, down 9% in the past week.
BTC is down in the past few days. Source: BTCUSD at TradingView| Source: BTCUSD on TradingView
Image by Dmitry Demidko, Charts from TradingView.com and CryptoQuant.com