Can This Bitcoin Ratio Have Hints For A Bottom?

Keshav Verma

1 year ago

3 mins read

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Past trend of the Bitcoin actual/realized price ratio may be forming a pattern that could hint at a possible bottom for the crypto at $17k.

Bitcoin Actual/Realized Price Ratio Currently Has A Value Of 0.8

As pointed out by an analyst in a CryptoQuant post, historical data of this BTC ratio may have interesting implications for the current market.

The realized cap is a capitalization model for Bitcoin that multiplies each coin in the circulating supply with the price at which the coin was last moved and takes the sum of all the values. This is different from the usual market cap, where the entire supply is simply multiplied by the current price of BTC to get the capitalization.

Now, from this realized cap, a “realized price” can also be obtained by dividing the metric with the total amount of coins in circulation.

The “actual/realized price ratio” is, therefore, an indicator that measures the ratio between the normal price of BTC and this new realized price.

Here is a chart that shows the trend in this Bitcoin ratio over the last few years:

Looks like the actual price is lesser than the realized one at the moment | Source: CryptoQuant

In the above graph, the quant has highlighted the major bottoms during previous Bitcoin cycles and the value of the actual/realized price ratio at which they occurred.

Looking at the chart, it seems like during the 2015 bottom, the value of the indicator was about 0.6. And in the 2018 bottom, it was about 0.67.

Currently, the metric has a value of 0.8, which means the price of the crypto is around 80% of the realized price right now.

If there is a pattern here with the actual/realized price ratio, then the bottom this time may also form at a value 0.07 higher than the previous time.

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.

Naturally, this would only happen if there really is such a pattern present here. Another indicator, the delta capitalization model, suggests that $15k could be a possible lower bound for a Bitcoin bottom.

BTC Price

At the time of writing, Bitcoin’s price floats around $19.2k, down 10% in the last seven days. Over the past month, the crypto has lost 35% in value.

The below chart shows the trend in the price of the coin over the last 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

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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