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

On-chain data shows that Bitcoin is now trading 24% below its realized price, here’s how much deeper the crypto went over historical cycles.

Bitcoin has so far fallen 24% below its realized price

As pointed out by one 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 cap by weighting each coin in the circulating supply against the price at which it was last moved.

This is different from the regular market cap, where each coin in circulation is simply multiplied by the last BTC price.

Now, from this realized peak, a “realized price” can be derived by dividing the metric by the total number of coins in circulation.

The utility of this price is that it indicates the cost basis of the average holder in the Bitcoin market. This means that every time the normal price falls below this indicator, the average investor enters a state of loss.

Here is a chart showing 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 graph above, the recent crash in the price of Bitcoin has taken the crypto 24% below its realized price, the deepest value observed in the current cycle so far.

It can be seen from the chart that the previous bear market in 2018/19 saw an even bigger decline as the price had fallen about 30% below the bottoming metric.

Comparing the two cycles in isolation suggests that the current bear market still needs to see a significant decline before the same bottoms are hit.

However, things change when the 2015 and 2012 lows are also taken into account. In 2012, Bitcoin went as low as 60% below realized price, while in 2015 the decline was around 41%.

There seems to be a pattern here, and that is that the percentage of falls below the indicator has been shrinking with each cycle.

If this trend continues to hold this time as well, Bitcoin may actually already be near the bottom for this cycle.

BTC price

At the time of writing, Bitcoin’s price is hovering around $16.5k, down 1% in the last week. Over the past month, the crypto has lost 14% in value.

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

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