This Bitcoin (BTC) realized price signal can identify the market bottom

by James · October 1, 2022

Bitcoin (BTC) is trading below its realized price indicator which is currently at $21,400. A decisive recovery of this level is likely to mark the market bottom.

The realized price is an on-chain indicator that measures the price of BTC at the time it last moved rather than the current price. In turn, it devalues lost coins and coins that have not moved for a long time.

Well-known analyst and trader @DylanLeClair_ tweeted a chart of the price and realized price, showing that the former has fallen below the latter. This means that a significant amount of buyers are at a loss and is a sign associated with bear markets.

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Previous history

The actual BTC price has fallen below the realized price five times since 2011. It did so in August 2011, January 2015, July 2018, March 2020 and July 2022 (black circles).

These movements have been associated with Bitcoin market bottoms. However, the periods in which this bearish decline occurred varied.

2011 – 110 days
2015 – 240 days
2018 – 115 days
2020 – 8 days
2022 – 100 days so far

Although there has been no consensus on the number of days the BTC price stays below the realized price, it seems that when Bitcoin recovers its realized price, it is a sign that the bottom has been reached.

In addition, with the exception of 2011, it always took less than 100 days after the initial decline for the bottom to be reached, although it was not confirmed until BTC retook the realized price.

Current reading

The BTC price has been below the realized price for 100 days now. Throughout this time, it attempted to recapture the realized price and even traded slightly above it, but has fallen back below that since.

Therefore, if previous readings are anything to go by, the bottom is not confirmed, but it may have been reached.

BTC movement

In terms of price action, BTC created a bearish candlestick with a long upper wick on September 21 (red icon). The candlestick caused a breakdown below the $19,000 support area and negated all the gains coming from the September 19 bullish hammer (green icon).

So while the daily RSI remains bullish, as its bullish divergence trendline remains intact, there is no horizontal support below the current price. On the contrary, the $19,000 area is now expected to provide resistance.

As for the short-term movement, it is possible that BTC is trading inside a descending wedge, completing a closing diagonal in the process. This is supported by the bullish divergence in the RSI and the extremely choppy movement.

If correct, Bitcoin would bounce towards $20,000 before another drop that would barely make a new yearly low.

This move will fit with the long-term count and complete the correction that has been ongoing since the all-time high price (white).

For Be[In]Crypto’s Latest Bitcoin (BTC) Analysis, click here

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