How Low Can Bitcoin Go? Here’s what Delta Price says
The Bitcoin “delta price”, which has served 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 could still fall further in value before a bottoming inflection point is reached.
Before looking at the concept of the “delta cap” (from which the delta price derives), two other popular capitalization methods for Bitcoin need to be understood first. These are “realized ceilings” and “average ceilings”.
The first of these, the realized rate, calculates the rate of BTC by taking each circulating coin’s value as the price at which it was last moved, and then taking the sum of those values for the entire supply.
This is different from the normal market value, which simply takes each coin’s value as equal to the current Bitcoin price.
The average value, as the name already suggests, is the average of the market value. The value is calculated by simply dividing today’s daily market value by the total number of days BTC has been in circulation for.
Taking the difference between realized and average caps gives us what is known as the “delta cap.”
The delta cap is a model popularly used to detect cyclical bottoms in the crypto price. Here’s a chart showing 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 graph above, the Bitcoin delta cap acted as a support for the market cap during the 2018/19 bear market.
A similar trend was also seen back during the 2014/15 bear. At the moment, the market capitalization is again approaching this value, but it is not quite there yet.
To put things in better perspective, the “delta price” is used, which is obtained by dividing the delta ceiling by the total number of coins in circulation (just as the normal price can be derived from the market value by doing the same).
Currently, the delta price is valued at around $12.8k, which means that Bitcoin is still a long way from this mark.
If the bottom also forms at the delta price just like in the previous two cycles, BTC will have to see more pullback before the same condition is met.
BTC price
At the time of writing, Bitcoin’s price is hovering 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
