The Bitcoin “delta price,” which has acted as the bottom during previous cycles, may once again hold the answers for a cyclical low this time as well.
Bitcoin Delta Price Currently Has A Value Of Around $12.8k
As pointed out by an analyst in a CryptoQuant post, BTC might still fall more in value before a bottom turning point is reached.
Before looking at the concept of the “delta cap” (which the delta price comes from), two other popular capitalization methods of Bitcoin need to be understood first. These are the “realized cap” and the “average cap.”
The first of these, the realized cap, calculates the cap of BTC by taking each circulating coin’s value as the price at which it was last moved, and then taking the sum of these values for the entire supply.
This is different from the normal market cap, which simply takes each coin’s value as equal to the current Bitcoin price.
The average cap, as its name already hints, is the mean of the market cap. Its value is calculated by simply dividing the current daily market cap with the total number of days BTC has been in circulation for.
Now, taking the difference between the realized and the average caps gives us what’s known as the “delta cap.”
The delta cap is a model that’s popularly used for spotting cyclical bottoms in the price of the crypto. Here is a chart that shows how this cap acted as the bottom in the 2018/19 bear market:
Looks like the normal market cap is near to this cap right now | Source: CryptoQuant
As you can see in the above graph, the Bitcoin delta cap acted as support for the market cap during the 2018/19 bear market.
A similar trend was also seen back during the 2014/15 bear. At present, the market cap is once again approaching this cap, but it’s not quite there yet.
To put things into better perspective, the “delta price” is used, which is obtained by dividing the delta cap with the total number of coins in circulation (just as the normal price can be derived from the market cap by doing the same).
Currently, the delta price has a value of around $12.8k, which means Bitcoin is still at some distance away from this mark.
If the bottom also forms at the delta price just like in the previous two cycles, then BTC will have to see more drawdown before the same condition is met.
At the time of writing, Bitcoin’s price floats around $16.9k, up 2% in the last week.
BTC holds strong around $16.9k | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com