The data shows that Bitcoin is approaching another retest at the realized price. Will the bulls manage to break through this resistance?
Bitcoin’s Recent Upwards Momentum Has Brought It Near Realized Price Again
According to a CryptoQuant analyst, BTC is currently trading at a price that was 138 times lower than the actual price as of June 2018.
Before we look at the data for the Bitcoin realized price, it’s best if a basic understanding of the “realized cap” is attained first.
To calculate the realized cap, multiply each coin in circulation by the last price that the coin was moved at or sold at and take the sum total.
This is different from the usual market cap, which doesn’t weigh each coin separately like this, and simply multiplies the entire supply with the current BTC price.
The market cap divided by total coin circulation gives us the BTC value. Much in the same way, a “realized price” can also be derived from the realized cap.
The significance of the realized price is that it’s the cost-basis of the average investor in the Bitcoin market. Below is a chart showing how the average price of Bitcoin has changed over the past six months.
Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the Bitcoin price was below its realized value for the past few months but is now approaching it due to bullish momentum.
Historically, the realized price has posed a resistance to the crypto’s value during bear market periods, keeping it trapped in the region below.
BTC was in this zone for only 133 days during 2015 and 300 days below it in 2015.
Bitcoin, with some exceptions, has been below realized prices for the past 138 days. The relief rally in July and August, which allowed the price to stay above the average for nearly a month, was one example of this opposite.
This resistance was broken several times in the six-months that have passed. So it is still to be seen if bulls are able to maintain momentum and make some gains above this level.
At the time of writing, Bitcoin’s price floats around $20.7k, up 7% in the last week.
Recent data suggests that the value of crypto has been steady above $20k | Source: BTCUSD on TradingView
Featured image by Kanchanara at Unsplash.com. Charts from TradingView.com and CryptoQuant.com.