The previous trend of Bitcoin’s actual/realized price ratio may be forming a pattern that could point to a potential bottom for the cryptocurrency at $17K.
Bitcoin’s actual/realized price ratio is currently 0.8
As pointed out by an analyst at CryptoQuant MailThe historical data of this BTC ratio could have interesting implications for the current market.
The detective cover It is a capitalization model of Bitcoin that multiplies each currency in the circulating supply by the price at which the currency was last moved and takes the sum of all values. This differs from the usual market cap, where the entire supply is simply multiplied by the current price of BTC to obtain capitalization.
Now, from this realized maximum, a “realized price” can also be obtained by dividing the scale by the total amount of coins in circulation.
Thus, the “actual/realized price ratio” is an indicator that measures the ratio between the normal price of BTC and this new realized price.
Below is a graph showing the trend in this Bitcoin percentage over the past few years:
Looks like the actual price is lesser than the realized one at the moment | Source: CryptoQuant
In the chart above, Quantum highlights key lows during previous Bitcoin cycles and the value of the actual/realized price ratio at which they occurred.
Looking at the chart, it appears that during the 2015 low, the indicator value was around 0.6. And at the 2018 low, it was around 0.67.
Related reading | Why Bitcoin Could Crash Another 50%, Says Michael “Big Short” Burry
At the moment, the scale has a value of 0.8, which means that the price of the cryptocurrency is about 80% of the price currently realized.
If there is a pattern here with the actual/realized price ratio, a bottom may form this time as well with a value of 0.07 higher than the previous time.
This would put the ratio at around 0.74, which means that Bitcoin would need to drop further to $17K before reaching this “lower” value.
Of course, this will only happen if such a pattern is already present here. Another indicator, the delta capitalization model, suggest $15,000 could be the bottom line for a Bitcoin bottom.
At the time of writing this report, Bitcoin price It is floating around $19.2K, down 10% in the past seven days. Over the past month, the cryptocurrency has lost 35% of its value.
The chart below shows the currency price trend over the past five days.
The value of the crypto seems to have been going down over the last couple of days | Source: BTCUSD on TradingView
Featured image from Michael Förtsch on Unsplash.com, charts from TradingView.com, CryptoQuant.com