Be[In]Crypto looked at the on-chain indicators of Bitcoin (BTC), including the realized price indicator (Realized price) and the realized price/value ratio (Realized Benefits vs. Value or VPN).
What is Bitcoin Realized Price
The realized price is an on-chain indicator that measures the price of Bitcoin at the time of its last move. In return, it devalues lost coins as well as coins that have not moved for a long time.
The actual price of BTC has only fallen below the realized price on three occasions since 2018: July 2018, March 2020, and July 2022 (black circles). Currently, it sits at $21,800. Therefore, although Bitcoin fell below its realized price in July, it has since regained that level.
Based on Bitcoin’s history, each decline below realized price has been consistent with a long-term bottom.
Once below the realized price, the price of Bitcoin remained below this level for several different durations:
- In 2018, he stayed there for four months
- In 2021, he stayed there for 11 days
- Finally, in 2022, it remained below its realized price for a month
Thus, there is no real agreement on the duration of the time spent below the realized price. However, it is interesting to note that once the price of BTC manages to find the realized price, it does not go back below.
This would therefore mean that Bitcoin has already bottomed out.
Earnings-to-value ratio (RPV)
The RPV indicator (Realized Profits-to-Value Ratio) corresponds to the ratio between realized profits and realized capitalization. Within this indicator, values below 0.0002 are rendered as oversold and have historically been associated with bottoms, as was the case in December 2018.
The current data of 0.0004 is proving to be significantly above this oversold level. However, they are similar to those of March 2020. (red circle).
Thus, this indicator suggests that the current low is more like the March 2020 low than the December 2018 low, making it a local low. A similar conclusion is also reached by looking at how long the price of Bitcoin has remained below the realized price.
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