The Bitcoin market has continued its downward movement lately as the crypto has failed to sustain any upward momentum. So, how much can the price drop before a bottom hits? Here are the comments of analysts and expectations…
Bitcoin price patterns set divergent targets on bottom of cycle
A recent post by CryptoQuant discussed various pricing models for BTC and what they might suggest a potential bottom. Before looking at the data for these price patterns, it’s best to grasp the major Bitcoin market cap patterns. The normal market cap of the crypto is calculated by summing the entire circulating supply and multiplying it by the current BTC price.
Another major use method is the “realized upper bound”. Where this model differs from the usual market cap is that instead of taking the latest value of BTC, it weights each coin in circulation by the price at which that coin last moved, and then takes an amount for the entire supply. Next comes the “mean cap”, which gives us the average market cap over the entire lifetime of Bitcoin by summing the market cap for each trading day and dividing it by the total age of the crypto (in days).
Each of these market cap models can be divided by the total number of coins in circulating supply to give their own “price” (which would naturally be the normal current price as far as market cap is concerned). Now, a chart showing the trend in these Bitcoin prices derived from these market cap patterns is as follows:
CryptoQuant drew attention to the thermo price and current price difference
Historically, bear market bottoms for Bitcoin have often occurred when the price is trading below the actual price. Currently, the value of crypto meets this condition. However, the actual price alone cannot set the bottoms, and this is exactly where other patterns come into play. As you can see in the chart, there are two more prices, “delta price” and “thermo price”. The first is obtained through the “delta upper limit”, which is defined as the difference between the realized upper limit and the mean upper limit.
In 2015 and 2018, the bottom was reached when the Bitcoin delta price went down. Since this metric is currently worth around $14.5k, it means that if the past trend follows this time as well, the crypto could potentially drop another 28% from here before bottoming out. As for the thermo price, this model is similar to the actual price, but instead of weighting by the price at which each coin last moved, this method uses the value at which the coins were first mined.
The 2011 bottom occurred when Bitcoin reached this level. However, CryptoQuant points out in the post that it is unlikely to act as a sub-indicator for this cycle as the gap between the current price ($20,000) and the thermo price ($2,365) is huge. At the time of writing, BTC cryptocoin.com As we reported, it is trading at $19,800 with a slight decrease.
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