Can Bitcoin Delta Capitalization Help Predict The Market Bottom?
There has been no shortage of price predictions over the past few months as the crypto winter lengthens. Investors and traders all want to get it at the best possible place so finding the market bottom is a big deal. Employing a range of technical indicators and industry knowledge, the top analysts are now looking at Delta Capitalization to predict the future movements of Bitcoin.
The crypto sphere has a number of prominent analysts that have used historical moving averages, logarithmic regression, and fractal patterns to estimate where markets are likely to go next. The latest is a hybrid technical and fundamental indicator, calculated using a formula measuring the difference between two long term Bitcoin moving averages: DeltaCap = RealizedCap – AverageCap
The Realized Cap approximates the USD value paid for all the Bitcoins in circulation while the Average Cap is a cumulative simple moving average of the whole history of market cap.
David Puell’s latest Medium takes a closer look at this Delta Cap in order to find that elusive range where Bitcoin will hit its lowest prices. Technical analyst WillyWoo recently posted on this latest metric using a graph to illustrate;
Even more useful, Delta Cap oscillates between Realised Cap and Average Cap, reliably touching at market tops and the start of the bull phase. Thus a helpful new timing signal of where we are in the market cycles. (@kenoshaking's Delta Cap article coming soon) pic.twitter.com/FsySZa5b0E
The article dissects the charts and states that; “As seen at first glance, delta cap provides an excellent framework for catching global bottoms — or at the very least bottoms near the floor of the bear cycle.”
Looking at previous market movements has often been used to predict future ones and the conclusion here is not pretty. On the upside people will have a lot of time to accumulate if the current pattern continues. But the bad news is that the bear market could go on for the entirety of this year, with a post accumulation breakout coming as late as Q2, 2020 – “the moment when it could be expected for delta cap to get nearest to average cap if the extension of these lines continues as-is.”
It appears that Bitcoin’s cycles are elongating and long term investors should be prepared for this. Larger bull runs need a lot more liquidity so this makes sense. There is the caveat that Delta Cap remains an experimental indicator but the results share conclusions with others from analysts such as Murad Mahmudov who has predicted the bear run to continue into at least Q3 of this year.
This new indicator appears to reinforce what others are telling us – the crypto winter is far from over and may have a lot longer to run. Hunkering down, slowly accumulating and hodling maybe the only way to survive it.