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Bitcoin Now Trading 24% Below Realized Price, How Deeper Can It Go?


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.

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%.

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.

Bitcoin Price Chart

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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