This Bitcoin (BTC) Realized Price Signal Could Identify Market Bottom
Bitcoin (BTC) is trading below its realized price indicator, currently at $21,400. A decisive retracement of this level could mark a market bottom.
Realized price is an on-chain metric that measures the price of BTC at the last move, not the current price. In turn, it devalues lost coins and coins that have not been moved for a long time.
Well-known analysts and traders @DylanLeClair_ A graph of the price and actual price was posted on Twitter, showing that the former has fallen below the latter. This means that quite a few buyers are in the red, a sign associated with a bear market.
Since 2011, the actual BTC price has been lower than the actual price five times. August 2011, January 2015, July 2018, March 2020 and July 2022 (black circles).
These moves are associated with a bottom in the Bitcoin market. However, the period in which this bearish decline occurs varies.
- 2011 – 110 days
- 2015 – 240 days
- 2018 – 115 days
- 2020 – 8 days
- 2022 – 100 days to date
While there is no consensus on the number of days that BTC will be below its actual price, it appears that once Bitcoin reclaims its actual price, this indicates that a bottom has been reached.
Furthermore, with the exception of 2011, the bottom was reached less than 100 days after the first dip, even though this was not confirmed until BTC recovered its realized price.
The BTC price has been below the actual price for 100 days. Throughout this time, it attempted to reclaim the realized price and even traded slightly above it, but has since fallen back below it.
So, if previous readings are any indication, the bottom is yet to be confirmed, but it may have been reached.
As for its price action, BTC created a bearish candlestick with a long upper wick on September 21 (red icon). The candlestick led to a break below the $19,000 support area and erased all gains from the bullish hammer (green icon) on September 19.
Therefore, although the daily RSI remains bullish, there is no horizontal support below the current price as its bullish divergence trend line remains intact. Instead, the $19,000 area is now expected to provide resistance.
As for the short-term move, BTC is likely to trade within a falling wedge and complete the closing diagonal in the process. This is supported by a bullish divergence and extreme volatility on the RSI.
If correct, Bitcoin will rally to $20,000 before another dip, which will hardly lead to a new yearly low.
This movement would be in line with the long-term count and complete the correction that has been going on since the all-time high (white).
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