This article explores the relationship between Bitcoin's price and realized supply, as well as its interpretation within the current market context.
What Is the Bitcoin Realized Supply Ratio?
Recently, analysts have drawn attention to a powerful chart showing the relationship between Bitcoin’s price and its realized supply. This ratio, especially when smoothed over a 30-day moving average (SMA-30D), provides insight into market sentiment and valuation. Currently, the purple SMA-30D line tracks this ratio. When it drops below a key lower threshold (the dotted line), it historically signals one of two things: either a local correction bottom in a bull market or the start of a bear market.
Historical Signals Hint at Recovery
Looking back, this same ratio dipped below the threshold during two critical points in recent history: following the COVID-19 market crash and after the China mining ban. In both instances, these dips marked strong rebound points for Bitcoin. The market eventually rallied from those lows, confirming that the signal was a useful indicator.
Undervalued or Turning Point?
With the Bitcoin realized supply ratio once again dipping below the dotted line, some analysts believe this could represent a prime accumulation zone. While caution is always warranted, indicators like this can guide smarter decision-making. As the saying goes, "All models are wrong, but some are useful." This one might be worth watching.
The analysis of the relationship between Bitcoin's price and realized supply provides helpful insights into its current value and future market trends.
