Bitcoin has been consolidating between real value and equilibrium price for three months now, which is why it may suggest that there may still be some way before the bear market ends.
Bitcoin is currently down, but near $21.1k real price
As per the latest weekly report from glassnodeRealized and balanced price models are suitable for estimating the bottom formation range for BTC.
“Value Received” is a bitcoin price model based on the idea of true range. In simple words, what it represents is the cost-basis of the average holder in the market.
This means that whenever the actual BTC price is trading below this metric, the market as a whole enters a loss position.
Another model for bitcoin is the “balance value”, which is calculated by taking the difference between the actual value and the transferred value.
The first of the two, as mentioned earlier, is the average cost-basis, or the price “paid” by the average investor for their coins. The latter model, the new “transferred value”, shows the exact opposite.
This is based on the price at which investors are selling their coins, and thus represents the price at which they “spend” their BTC.
Due to this fact, the report states that balanced value “can be thought of as a “fair value” model, capturing the difference between what was paid (cost-basis) and what was spent (transferred). does.”
Now, here is a chart that shows the trends in these bitcoin price models, as well as the true price since the year 2014:
The time spent by the crypto in this range during the various cycles | Source: Glassnode's The Week Onchain - Week 44, 2022
As you can see in the above graph, the actual price of bitcoin is currently around $21.1k, while the equilibrium price is around $16.5k.
Historically, crypto has consolidated between these two levels, while a period of formation has lasted beneath a bear market.
In the 2014-15 cycle, BTC was stuck in this zone for 10 months, while in 2018-19 it was stuck there for 5.5 months.
So far in the current bear market, Bitcoin has spent a total of about three months in this area. Glassnode notes that the current cycle is still missing periods seen in previous cycles.
Right now, the crypto is nearing a retest of the upper bound of this range, but if this bear is also at least historically long, the crypto could be rejected back down.
At the time of writing, bitcoin is priced around $20.5k, up 7% over the past week.
BTC holds strong above $20k | Source: BTCUSD on TradingView
Featured image from Daniel Krueger on Unsplash.com, charts from TradingView.com, Glassnode.com