Meet The New Experimental Bitcoin (BTC) Price Valuation Metrics: Delta Cap And Top Cap
Researchers Willy Wood and David Puell have released some Bitcoin valuation metrics in an attempt to depict a more holistic and widespread overview of the market for the cryptocurrency.
The experimental valuations were anticipated to mesh technical analysis with network activity development observations.
So far – according to Sam Ouimet of CoinDesk, the new ‘Top Cap’ and ‘Delta Cap’ metrics have proven to be a good tool to showcase the highs and lows of Bitcoin’s market cycle.
Delta cap, which was able to successfully to catch the 2011 and 2015 bear markers, is figured by subtracting the average cap from the realized cap.
According to Ouimet, a look at the delta cap might suggest that Bitcoin could be moving away from bearish trends, but he said a simple glance might not be enough.
Ouimet explained how Bitcoin only hit bottom and then escaped a bear market when the delta and average caps either collided or came close to doing so. Right now, the delta cap is roughly $1,600 more than the average. This suggests some things might still have to change before a true Bitcoin bottom would be realized.
Top cap, which was proposed by Woo in conjunction with Puell, is calculated by multiplying the average cap by 35. Woo said the number 35 was figured after it was found to have accurately pinpointed different historical tops for Bitcoin.
Ouimet wrote how the top cap has so far depicted a moving average with resistance at $35 in 2011, $237 in 2013, and $1000 in 2013, “all of which were precise market tops followed by significant, albeit temporary depreciation.”
The price of Bitcoin touched the top cap during 2018 when the popular cryptocurrency was at its record peak of nearly $20,000.
Today’s price, at about 80% below the top figure, represents a drastically different scenario for the well-known virtual currency.
Woo asserted how delta and top cap plotted on the same chart would create the anticipated market movement boundaries for Bitcoin. They think $90,000 would be “at a minimum on the early trajectory” when it comes to the next big market peak.