According to the data, the #Bitcoin bubbles are more predictable than ever and this year’s has just begun.
Bitcoin (BTC) is still at the „lower limit“ of a bubble in 2021, according to new data tracking behaviour by miners and investors.
In the latest sign that BTC’s price action still has great potential for growth, researcher Geert Jan Cap showed upward signs from Bitcoin’s thermocap metric.
Thermocap Metric Suggests Bitcoin is Just Starting
Thermocap is a metric that aims to track Bitcoin’s price cycles based on the actions taken by miners and investors with respect to buying and selling BTC.
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It uses the so-called thermocap multiple, which divides the Bitcoin price on a given day by the cumulative block subsidy, or all the rewards earned by the miners from day one.
The resulting value gives an idea of how profitable it is to sell at a given price, and therefore why price volatility may have occurred at various points in Bitcoin’s history.
„It shows when there was a bubble in the price with a very high signal-to-noise ratio,“ explains an introduction to the metric, adding that the thermocap metric also „allows for comparison of bubble peaks“ and „appears to show a relatively constant value of the multiple of ‚healthy‘ price levels,“ among other benefits.
As of 17 January 2021, Bitcoin’s thermocap multiple stood at 17.5, down from a recent high of 20 at the beginning of the month.
Given that bubble activity historically occurs between the ages of 16 and 60, it’s immediately apparent that Bitcoin still has considerable room to explore this upward cycle.
Bitcoin Thermocap Metric vs. BTC/USD Pair Chart Source: Geert Jan Cap/Twitter
„We are still at the lower limit of the 2021 bubble phase,“ Cap summed up in the accompanying Twitter comments.
Weak hand“ sales define BTC’s bear market
Meanwhile, in terms of how hodlers cause and react to price events, statistician Bitcoin Fast Profit Willy Woo believes that a sales cycle of weak hands during each downward market in the life of Bitcoin is a demonstrable phenomenon that takes precedence over changing narratives.
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On Sunday, Woo noted that the realized price of Bitcoin (US dollars stored on the web) is higher than the spot price during the lows of both late 2018 and March 2020. In the former case, BTC/USD fell by 85% from its previous high of about $20,000.
„Weak hands (buyers who buy influenced by the FOMO index) always capitulate by allowing strong hand thoughtful buyers to get bargains,“ he said.
„This happens in EVERY downward cycle.
Bitcoin realised price chart. Source: Willy Woo/ Twitter
The comments are particularly timely given recent market trends, as Bitcoin rose to $42,000, sold for $30,000 and then reached $40,000 again, all in one week.
As reported by Cointelegraph, the data highlighted the decline in small balance wallets, while the number of wallets with a balance of 1,000 BTC or more grew. A bitcoin transfer from small investors to whales was taking place, analysts warned, asking sellers not to divest their funds during such volatile conditions.
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„The narrative for each bullish and bearish market changes from cycle to cycle, but the effective mechanism is the same,“ Woo concluded.
„I have found little value in reading market news and industry narratives, IMO tracking capital flows in relation to participants‘ behaviour patterns is better“.