Bitcoin (BTC) is already at the “low end” of the 2021 bubble, recent research on miner monitoring and investor activity indicate.
In the new warning that BTC’s market activity still has considerable growth opportunities, researcher Geert Jan Cap shows bubbling signals coming from Bitcoin’s thermocap.
Thermocap suggests Bitcoin just getting started
Thermocap is a measure that seeks to measure Bitcoin price intervals based on actions taken by miners and buyers in the acquisition and sale of BTCs.
It utilises the so-called thermocap multiple, which divides the Bitcoin price on a given day by the total block subsidy, or any compensation received by the miners on the first day.
The resulting valuation provides an insight into how lucrative it is to sell at a given price point, and thus why price fluctuations could have occurred at different points in Bitcoin’s existence.
“It shows when a bubble in the price was present with a very high signal to noise ratio,” an introduction to the metric explains, adding that thermocap also “enables comparison of the bubble peaks” and “appears to show a relatively constant value of the multiple for ‘healthy’ price levels” among other benefits.
As of Jan. 17, 2021, Bitcoin’s thermocap multiple stood at 17.5, down from a previous high of 20 earlier this month.
Given that bubble activity has traditionally existed between 16 and 60, it is instantly evident that Bitcoin still has ample space to explore this bull run.
“We’re still in the low end of the ’21 bubble phase,” Cap summarized in accompanying Twitter comments.
Weak hand sell-offs define BTC bear markets
In terms of how hodlers cause and respond to price occurrences, meanwhile, Statistician Willy Woo argues that a period of poor hands selling during any bear market in Bitcoin’s lifetime is an established pattern that takes precedence over evolving narratives.
On Sunday, Woo illustrated Bitcoin’s realised price—U.S. dollars deposited in the network—is higher than the spot price at the bottom of both late 2018 and March 2020. In the former event, BTC/USD dropped by 85 per cent from its previous top by about $20,000.
“Weak hands (buyers who buy under FOMO) always capitulate allowing strong handed thoughtful buyers to get bargains,” he commented.
“This happens in EVERY bear cycle.”
Comments are especially timely considering recent market developments when Bitcoin climbed to $42,000, sold to $30,000, and then reached $40,000 again, all within a week.
As Cointelegraph noted, the data highlighted lowering of small-balance wallets, while the number of wallets with a balance of 1,000 BTC or more increased. The transition of bitcoins from small investors to whales was continuing, observers warned, appealing to sellers not to part with their assets in such uncertain circumstances.
“The narrative for each bear and bull market changes cycle to cycle, but the effective mechanism is the same,” Woo concluded.
“I’ve found little value reading market news and industry narratives, IMO tracking capital flows in relation to the behaviour patterns of participants is better.”
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