Bitcoin's Approaching Reset
Insights Into Bitcoin's Realized Price
IN TODAY’S REPORT
What we cover: TECHNICAL ANALYSIS Edition. Pseudo-four year cycles. Bitcoin Realized Price and our Stretch % indicator. What’s next?
Observations on Realized Price
Bitcoin’s pseudo-four year cycle is not news, nor is it guaranteed in perpetuity. That said, it’s been highly reliable in the fifteen years since Satoshi Nakamoto — a person(s) still anonynous in the age of zero privacy — unleashed Bitcoin into existence.
Today we step back and use a single chart to examine a single metric: Realized Price. For those new to Bitcoin and onchain analysis, Realized Price is the value of all bitcoins at the price they last moved on-chain, divided by the number of bitcoins in circulation.
In short, Realized Price gives us the average purchase price of all bitcoins in circulation. Importantly, this average price reflects the value when any Bitcoin was last transacted, not its current value. Because of this, we can compare Bitcoin’s Realized Price with its current price to reveal interesting relationships and acquire insight into current market action.
Because the four year cycle has proven reliable to date, we’ve displayed each Halving Date — when Bitcoin’s block reward gets cut in half — along with the midpoint date between halvings.
Let’s get into the analysis…
BITCOIN (BTCUSD). Daily Chart w/ Realized Price & REKTelligence RP Stretch %.
To gain insight into the current state of Bitcoin mid-2024, we’ve applied the REKTelligence Stretch % Indicator to Bitcoin’s Realized Price. This indicator meaures the percentage distance (aka Stretch %) between Bitcoin’s Realized Price and its current price. What’s the point? We want to see whether Bitcoin is significantly “stretched” above or below its Realized Price, and what that might suggest for prices going forward.
Looking at our chart from late 2012 to the present, we can make several observations:
Historically, the two years following a Halving have seen a major price advance for Bitcoin, with two noteworthy spikes in the REKTelligence Realized Price Stretch % (RP Stretch %) preceding the midpoint date. Simply put, Bitcoin has historically soared and gotten stretched well above its Realized Price sometime following the Halving but before the midway point between Halvings.
The two spikes in RP Stretch % show moments of either [a] extreme bullishness at or near a major Bitcoin price high, or [b] an early bull cycle price high preceding the cycle high by several months.
The 2012 Halving was followed by two RP Stretch % spikes:
A 487% stretch above Realized Price (April 2013)
A 624% stretch above Realized Price (November 2013). This spike occurred at/near bull cycle high.
The 2016 Halving was followed by two RP Stretch % spikes:
A 268% stretch above Realized Price (June 2017)
A 373% stretch above Realized Price (December 2017). This spike occurred at/near bull cycle high.
The 2020 Halving was followed by two RP Stretch % spikes:
A 296% stretch above Realized Price (February 2020). This spike occurred at/near bull cycle high, though Bitcoin slightly exceeded this high in November 2020.
A 193% stretch above Realized Price (October 2020). This spike occurred at/near bull cycle high, but with less momentum and a lower Stretch % than in February 2020.
The recent 2024 Halving was notably preceded by a new all-time high for Bitcoin and a 175% stretch above Realized Price (March 2024).
The last bull cycle (2020 - 2021) was the first to see a lower Stretch % reading on the 2nd spike, showing a divergence with price for the first time. In other words, Bitcoin rose to a new all-time high in November but with a lower Stretch % reading than in the Spring.
So what does all this mean for Bitcoin in 2024?
Bitcoin may have just put in its first Stretch % spike of the new bull cycle — ahead of schedule.
Additionally, applying a 4-year EMA to the Realized Price Stretch % Indicator, retracements down to the 4-year EMA have served as a kind of reset level for Bitcoin, generally speaking. While the 2016-2017 bull cycle adhered to this beautifully prior to the midpoint date, the 2020-2021 bull cycle observed this moving average less precisely, but arguably to a meaningful degree.
At the start of the second week of July 2024, Bitcoin’s RP Stretch % now approaches its rising 4-year EMA.
The significance? We could potentially be approaching another reset point for Bitcoin, and an opportunity for those seeking exposure to the king crypto to acquire it at a tactically advantageous moment.
Until next time…
peace_love_crypto-DB
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