Bitcoin On-Chain Models Hint at Potential Bottoming Zone

Bitcoin's price has been struggling to maintain its recovery, slipping back down to $67,200. As a result, analysts are turning their attention to on-chain models that could be hinting at a potential bottoming zone for the asset.

One such model is the Realized Price, which measures the cost basis or acquisition value of the average token part of the cryptocurrency's circulating supply. Whenever the spot price is above this metric, investors as a whole are assumed to be in a state of net unrealized profit. Conversely, if the asset falls below the level, it can imply the dominance of loss on the blockchain.

According to data from analyst Willy Woo, the Bitcoin Realized Price has been sliding down recently, indicating that average investor cost basis has been declining. This is a sign that some net capital could be leaving the cryptocurrency.

The Realized Price has dropped to around $54,200 since November, and BTC has yet to retest this level in the latest bearish market phase. Interestingly, past bear markets have found their bottoms when BTC was below this indicator.

Another model mentioned by Woo is the CVDD (Cumulative Value Days Destroyed), an indicator created by him that derives from the popular Coin Days Destroyed (CDD) metric. The CVDD measures the number of coin days being reset across the network and attaches a USD value to each of these coin days, based on the BTC price at the time.

Today, the Bitcoin CVDD is sitting at $45,500. If historical patterns are anything to go by, it's possible that BTC could find a bottom somewhere between this level and the Realized Price at $54,200.