Bitcoin (BTC) on-chain: Market indicators point to underlying signals

To be[In]Crypto took a look at Bitcoin’s on-chain indicators, focusing this week on reserve risk, breakeven price, and cumulative days destroyed (CVDD) Cumulative value days destroyed).

Bitcoin stock risk indicator

Reserve risk is BTC’s on-chain cyclical indicator that measures long-term holders’ confidence in the current price of the asset.

When confidence is high but the price is low, the reserve risk shows low values. In Bitcoin’s history, these periods have featured the best risk / reward ratios.

On 6 July, the reserve risk indicator fell to a new all-time low of 0.00099. This is the first time this indicator has dropped below 0.001. It is therefore possible that the bottom has been reached.

In the past, Bitcoin’s low was confirmed when the indicator crossed its descending trend line (in black). For this breakout to be confirmed, the reserve risk indicator must exceed 0.002.

The CVDD indicator

The cumulative value of days destroyed (CVDD), or Cumulative value days destroyed, is the ratio of the cumulative value in USD of the days of destroyed coins to the age of the market (in days). In the past, this indicator has been an accurate index of the market’s absolute lows, especially during the lows of 2015, 2019 and 2020 (black circle).

Interestingly, the price of BTC never dipped below CVDD, but it bounced back before reaching it.

The line sits at around $ 15,000, which is just below the current low of $ 18,700 (red circle).

The balanced price of Bitcoin

The balanced price Balanced price) is the difference between the realized price and the BTC transfer price. The transfer price is the cumulative sum of the days of destroyed coins in USD, adjusted by the supply in circulation and the total time since the start of Bitcoin.

Historically, the low was reached when the price dropped slightly below the indicator, before regaining it (black circle).

During the current decline, BTC reached its equilibrium price on June 18 and then rebounded.

As with the CVDD indicator, this indicator suggests that a low has been reached or that a final decline should be expected before the low.

Balanced Price Chart – Glassnode


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