Bitcoin Now Trading 24% Below Realized Price, How Deeper Can It Go?
November 17 2022 - 11:00AM
NEWSBTC
On-chain data shows Bitcoin is now trading 24% below the realized
price, here’s how much deeper the crypto went during historical
cycles. Bitcoin Has So Far Declined 24% Under The Realized Price As
pointed out by an analyst in a CryptoQuant post, drawdowns below
the realized price have been shrinking with each cycle. A popular
capitalization model for Bitcoin is the “realized cap,” which
measures the cap by weighting each coin in the circulating supply
against the price at which it was last moved. This is different
from the usual market cap, where every coin in circulation is
simply multiplied with the latest BTC price. Now, from this
realized cap, a “realized price” can be derived by dividing the
metric with the total number of coins in circulation. The
usefulness of this price is that it signifies the cost basis of the
average holder in the Bitcoin market. This means that whenever the
normal price dips under this indicator, the average investor enters
into a state of loss. Here is a chart that shows the percentages
below the realized price BTC has gone during each cycle: Looks like
the value of the metric has plunged in recent days | Source:
CryptoQuant As you can see in the above graph, the latest crash in
the price of Bitcoin has taken the crypto 24% below the realized
price, the deepest value observed in the current cycle so far. It’s
apparent from the chart that the previous bear market of 2018/19
saw an even larger drawdown, as the price had declined about 30%
below the metric at the bottom. Related Reading: Bitcoin 7-Day
Volatility Comes Alive As FTX Collapse Shakes Market Comparing the
two cycles in isolation would suggest the current bear market still
needs to see a notable amount of decline before the same bottom
values are hit. However, things change when the 2015 and 2012
bottoms are also taken into account. In 2012, Bitcoin went as low
as 60% below the realized price, while in 2015 the decline was
around 41%. Related Reading: XRP Whale Withdraws Massive $135M From
Binance, Bullish Signal? There seems to be a pattern here, and it’s
that the percentage of fall below the indicator has been shrinking
with each cycle. If this trend continues to hold this time as well,
then Bitcoin may in fact already be near a bottom for this cycle.
BTC Price At the time of writing, Bitcoin’s price floats around
$16.5k, down 1% in the last week. Over the past month, the crypto
has lost 14% in value. The below chart shows the trend in the price
of the coin over the last five days. The crypto continues to show
stale price movement | Source: BTCUSD on TradingView Featured image
from Traxer on Unsplash.com, charts from TradingView.com,
CryptoQuant.com
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