The past trend in the Bitcoin real/actual price ratio could be hinting at a potential bottom for crypto at $17k.
The current value of Bitcoin is 0.8
An analyst pointed out in CryptoQuant that historical data on this BTC/USD ratio could have important implications for today’s market.
A capitalization model for Bitcoin, the realized cap multiplies every coin in the circulating supply by the last price it was moved at and then takes the sum. This is in contrast to the market cap where all the supply is multiplied with the current BTC price. To get capitalization, this is done.
Now, from this realized cap, a “realized price” can also be obtained by dividing the metric with the total amount of coins in circulation.
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The “actual/realized price ratio” is, therefore, an indicator that measures the ratio between the normal price of BTC and this new realized price.
This chart shows how Bitcoin has changed over time.
Source: CryptoQuant| Source: CryptoQuant
The quant highlighted in the graph the tops of previous Bitcoin cycles, along with the price ratio (actual/realized) at which these bottoms occurred.
It appears that during 2015, the indicator had a value of 0.6. The 2018 bottom saw it drop to 0.67.
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The current value of the metric is 0.8. That means that crypto prices are currently around 80% below the actual price.
The bottom of the last time could also be 0.07 higher if there’s a trend in the real/actualized price ratio.
This would put the ratio at about 0.74, which implies Bitcoin will need to decline further until $17k before this “bottom” value is reached.
Of course, it would only occur if such a pattern exists. The delta capitalization model suggests that $15k might be the lower limit for Bitcoin’s bottom.
BTC Prices
At the time of writing, Bitcoin’s price floats around $19.2k, down 10% in the last seven days. In the last month, crypto lost 35%.
Below chart displays the trends in the value of the coin during the last five working days.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Featured image from Michael Förtsch on Unsplash.com, charts from TradingView.com, CryptoQuant.com