Bitcoin’s Potential Bottom According to Analyst Insights

Analyst Willy Wu recently discussed potential bottom signals for Bitcoin using specific on-chain models.

Previous Bear Markets and Bitcoin’s Bottoms

In a recent update on X, Wu examined Bitcoin’s pricing through two key on-chain models: realized prices and CVDD.

Firstly, the “realized price” gauges the acquisition cost of the average portion of a cryptocurrency’s circulating supply. When Bitcoin’s spot price exceeds this metric, it suggests that, in general, investors are experiencing unrealized gains. Conversely, if the price slips below this level, it might indicate that losses are prevailing among investors.

Wu provided a chart showing a drop in Bitcoin’s realized price, currently around $54,200. This decline suggests that the average cost basis for investors has decreased, hinting that some capital may have exited the market as average investments per holder went down.

Historically, Bitcoin’s price has bottomed when it dips below this realized price, which has not yet occurred in this latest bear market phase. The CVDD model presented in Wu’s analysis has consistently acted as a lower boundary in previous cycles, with Bitcoin never falling beneath it.

CVDD, or Cumulative Value Days Destroyed, is a concept devised by Wu, building on the established Coin Days Destroyed (CDD) metric. A “coin day” accumulates for each BTC that remains inactive on the blockchain for a single day. When such a token is moved after a period of inactivity, its accumulated days are “destroyed,” resetting to zero.

CDD counts these reset days across the network, while CVDD enhances this by assigning a USD value to each of these destroyed coin days based on Bitcoin’s current price and summing them up. This is then normalized by comparing it to the overall market age in days.

At present, Bitcoin’s CVDD stands at about $45,500. Given historical patterns, Bitcoin might find a bottom between this level and the realized price of $54,200. However, Wu cautioned against assuming this will happen without reservation:

The model reflects past behaviors, but it’s worth noting that only four bear markets have occurred in Bitcoin’s history. With a long-term bull market in risk stocks, a major shift could lead to truly uncharted territory.

Current Bitcoin Price Situation

As for Bitcoin’s price, it recently dropped to around $67,200 and has struggled to bounce back since.