$15k Possible Bottom For Bitcoin? “Delta Cap” Says So
01 Julio 2022 - 2:00PM
NEWSBTC
The “delta capitalization” model of Bitcoin may suggest that around
$15k could be a possible bottom for the crypto’s price. Past Delta
Cap Trend Shows Bitcoin May Still Face More Decline Before A Bottom
As explained by an analyst in a CryptoQuant post, the BTC market
cap is now below the realized cap, but still above 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. The
normal market cap is calculated by just taking the total number of
coins currently in circulation and multiplying it by the price of
BTC right now. 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. Related Reading
| USDC Exchange Reserves Rise As Investors Escape From Bitcoin
For example, if there are 2 BTC in circulation and the current
price is $19k, then the normal market cap is simply $38k. However,
if one of these coins was last transacted at, say, $15k, and the
other at $19k, then the realized cap would be $34k instead. 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 below chart shows
the trend in the different market caps for BTC. The normal market
cap still seems to be above the delta cap at the moment | Source:
CryptoQuant As you can see in the above graph, the Bitcoin market
cap has recently dipped below the realized cap. However, it has
still not gone down near enough to touch the delta cap.
Historically, the value of the crypto has formed bottoms whenever
the market cap has been between the other two caps. Related Reading
| Fed Announces Inflation Warnings As Bitcoin Whales Remain In
Wait Mode In 2020, the coin bottomed out after the market cap went
slightly under the realized cap, but in 2018 the metric even dipped
a bit below the delta cap before the bottom was in. 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. And if so, then
Bitcoin could potentially sink to or a little under $15k, before
the current cap touches the delta cap and the bottom forms. BTC
Price At the time of writing, Bitcoin’s price floats around $19.3k,
down 9% in the past week. BTC has gone down over the last few days
| Source: BTCUSD on TradingView Featured image from Dmitry Demidko
on Unsplash.com, charts from TradingView.com, CryptoQuant.com
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