Capitulation Confluence Model: Bitcoin (BTC) is in the phase of triple capitulation

According to the recently published Capitulation Confluence Model, the current phase of the Bitcoin market is similar to the ends of all three historical bear markets. If this is true, BTC may soon start another bull run. Moreover, this remains partially consistent with readings from the indicator on the chain: Realized price.

Plan C is a cryptocurrency market analyst known for publishing cutting-edge models that combine multiple technical and chain analysis indicators. Back in May, BeInCrypto wrote about the Confluence Floor Model, which was supposed to indicate the price below which the BTC price would not fall. Unfortunately, just a month later, it turned out that the model had failed, and the largest cryptocurrency fell far below what was supposed to be the “floor”.

Capitulation Confluence Model readings

The analyst’s latest model called the Capitulation Confluence Model combines 3 on-chain indicators: Realized Loss, Network Cost Basis Change and SOPR. The graph obtained from their combination suggests that Bitcoin is today in the negative territory of the new indicator. Historically, this territory has been correlated with the period of the macro bottom in the BTC price and the subsequent accumulation.

In the chart below, we see that so far the Capitulation Confluence Model indicator has been in negative territory 4 times:

• at the end of 2011: BTC bottom of $2.05
• early 2015: BTC bottomed out at $164
• at the turn of the year 2018-2019: BTC bottom at $3148
• currently as of June 2022: BTC bottom at $17,600

Also, usually (except in 2011) entry into negative territory was correlated with a sharp drop in BTC price, leading to a macro bottom. This was followed by several months of accumulation. As the analyst calculates, it lasted for 112 days in 2011, 62 days in 2015 and 113 days in 2018-2019, respectively.

The average of these three historical periods gives us 96 days, after which Bitcoin ended its capitulation and started a new bull market. Plan C adds that the current capitulation, according to the Capitulation Confluence Model, has already lasted 65 days. Thus, it has already lasted longer than the corresponding period in 2015. Moreover, there are only 31 days, or one month, left, which is equal to the average of previous historical capitulation periods.

One of the first commentators on the Capitulation Confluence Model was the author himself. A few dozen minutes later, he published a tweet suggesting that the capitulation period indicated by the indicator is the best option for “just DCAing every day.”

According to Plan C, we cannot precisely identify the bottom of the current bear market, but with the help of the indicator it has created, we can very likely identify the ongoing capitulation phase. Thus, this provides an excellent opportunity for systematic BTC accumulation through the well-known Dollar Cost Averaging (DCA) strategy.

BTC Surrender Vs. Realized price

Another interesting comment was made by the user @TheChainRN, who referred his tweet to an indicator of the chain: the realized price. Regarding this well-known indicator, he points out that historical capitalization periods have lasted longer than the previously mentioned 65 days. The user concludes that #BTC has more work to do.”

His general point is that several calculations indicate $BTC is near a bottom in the market based on duration (65 days). That’s reasonable, but on the short end of the span – 2 of the other 3 values ​​are over 100 days. Based on realized price, #BTC has more work to do: https://t.co/H2XbKsdpAs

— The Chain Reaction (@TheChainRN) 15 August 2022

Looking at the realized price indicator, we see that the periods when Bitcoin was below the orange line (green areas) were actually quite long:

• 116 days between September 2011 and January 2012
• 295 days between January and October 2015
• 135 days between November 2018 and April 2019

Additionally, on the chart, we see another short phase when the BTC price plunged below the realized price. This was the short 7-day period of the March 2020 COVID-19 crash.

But most interesting are the current readings from this indicator, which seem to contradict the Capitulation Confluence Model narrative. Bitcoin actually broke below the orange line on June 13. But just one month later – on July 18 – it erupted above it. Currently, the price of BTC is around $2000 above realized price indicator.

If so, the capitulation may already be nearing its end, and the 96-day average from the Capitulation Confluence Model may be too long. On the other hand, however, we can see on the realized price chart that during the accumulation period of 2011-2012, as well as in 2015, the price of BTC broke out above the orange line, but shortly after it returned below it again. Thus, regaining positive territory on the 3-indicator Capitulation Confluence Model can be a better signal of the end of the capitulation than just the fact that a breakout above the realized price chart.

For Be[In]Crypto’s Latest Bitcoin (BTC) Analysis, clickk here.

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