Benjamin Cowen breaks down one of his key on-chain metrics that has historically signaled when bear market bottoms are near and explains why Bitcoin needs to test it soon.
Key Points
Key Highlights:
- The realized price is the average price at which all Bitcoin was acquired, calculated by dividing the realized cap by circulating supply, and it currently sits around 53 to 54K
- In every single bear market cycle, Bitcoin has gone below the realized price before the final bottom was in, whether 2011, 2014, 2018, or 2022
- Right now Bitcoin is still trading above the realized price, meaning historically this is a possible outcome that still needs to play out before the bear market truly ends
- The supply in profit and loss crossing indicates the low is near, but historically that low arrives one to four months after the cross, not immediately
- Some models say 60K is the bottom, but the terminal price model and realized price metric both suggest lower prices are coming later this year
Takeaway This bear market is hard because the models disagree. Some say the low is in, others say it is not. But if Bitcoin follows the pattern of every other midterm year, testing the realized price in the coming months is not just possible, it is probable.
