On-chain data shows Bitcoin has now been below its realized price for 163 days in this bear market; Here’s how this compares to previous cycles.
The realized price of bitcoin is currently estimated to be around $19,900
According to CryptoQuant’s year-end dashboard release, if BTC reclaims this level, the bear market would be over. To understand what the “realized price” is, the “realized cap” must first be considered. The realized cap is a capitalization model for Bitcoin that aims to provide some sort of “real world value” for the crypto.
Unlike the usual market cap, which simply values each coin in circulation at the current BTC price, the realized cap values each token at the same price it was last moved at. For example, if 1 BTC was bought for $20,000 but the price has now changed to $16,000, the market cap will price it at $16,000. However, the realized cap will say its true value is $20,000.
Now dividing the total realized cap of Bitcoin by the total number of coins in circulation gives a “realized price”. This price indicates the cost basis of the average coin in the market (i.e. the price at which investors acquired the average coin). Here is a chart showing the evolution of the realized BTC price over the entire history of the asset:
BTC price seems to have been below this metric for the past few months | Source: CryptoQuant
As the chart above shows, the normal price of Bitcoin has been below the realized price for some time. Historically, BTC has spent very little time in this region, as only the worst of a bear market usually pulls the coin below levels.
From the chart, BTC spent 158 days below the realized price during the 2011-2012 bear market. Then, in 2014-2015, the coin spent a whopping 276 days in this zone.
The 2018-2019 bear experienced the shortest time in the region as it took the price 134 days to pull above the level. Finally, in the current cycle, Bitcoin is trapped below the realized price for 163 days.
This means that BTC has spent more time in this region in the current bear market than in any other region before it, with the exception of 2014-2015. If the current bear is comparable to 2014-2015, that would mean that it will take more than 100 days for Bitcoin to leave the zone.
Anyway, CryptoQuant expects the crypto to recapture this level sometime in 2023 and then this bear will be considered over.
BTC price
At the time of writing, the price of Bitcoin is hovering around $16,600, down 1% over the past week.
BTC has declined in the last two days | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, charts by TradingView.com, CryptoQuant.com
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