On-chain data shows that bitcoin‘s true mid-market price is valued at $29,700 right now, making the level of particular importance for the coin.
bitcoin‘s actual average market price is currently $29,700
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The “market cost basis” refers to the average price at which investors in the sector purchased their coins. A popular way to calculate this cost basis is through the “realized limit,” which measures the total value of the cryptocurrency assuming that the price at which each coin was last transferred on the blockchain is its true value.
When you divide this capitalization model by the total number of coins in circulation, you get the “realized price,” which is the basis for the average cost of the offering.
However, this method has some problems, such as a portion of the circulating supply of bitcoin being permanently inaccessible (due to loss of wallet keys). Much of this dormant supply would have been commercialized a long time ago, meaning its cost base would be shallow compared to current prices. Therefore, if it is included in the metric, it would deviate its value from reality.
David Puell of Checkmate and Ark Invest came up with “Cointime Economics” a while ago, a new methodology that addresses problems with realized pricing.
“Cointime Economics introduces a simplified framework to efficiently discount the impact of supply loss and amplify economic impacts on truly active supply,” explains Glassnode.
The chart below shows the trend in the “true average market price” of bitcoin, as calculated by this advanced model.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/29700-Could-Be-the-Next-Big-Level-to-Claim-Bitcoin.jpeg" alt="Average bitcoin Real Market Price” width=”1495″ height=”861″ loading=”lazy”/>
Looks like the spot price of the asset is currently below this line | Source: @_Checkmatey_ on X
According to this more accurate model, bitcoin currently has a real average price of $29,700. Therefore, the spot price of the asset is trading well below this level.
The chart shows that significant breakouts above this indicator have historically resulted in the cryptocurrency enjoying sustained bullish momentum.
Checkmate has also attached the “AVIV Ratio Z-Score” data on the same graph. The “AVIV Ratio” tracks the deviation from the true market mean that btc is currently observing.
The Glassnode leader notes that this indicator is the most accurate measure of the bitcoin market centroid. At current value, the metric is “still -0.6 standard deviations below its long-term mean,” according to the analyst.
The short-term price outcome based on this is uncertain, but in the long term, bitcoin could revert to its mean, thus making current price levels potentially profitable buying points.
btc Price
At the time of writing, bitcoin is trading at around $27,500, down 3% in the last week.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/8f4DCAAk/" alt="bitcoin price chart” width=”1534″ height=”869″ loading=”lazy”/>
The value of the coin appears to have registered some drawdown today | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Charts from TradingView.com, Glassnode.com
