Researchers Willy Woo and David Puell’s work suggests bitcoin is close to a bottom, but that a breakout may not occur for another year.

Willy Woo is a well-known name in the crypto space. He popularised the NVT ratio (Network Value to Transactions – like a P/E ratio of the kind used for stock valuations, but for crypto), and is a regular commentator on the ecosystem. Now, he teams up with David Puell to offer further metrics for finding when bitcoin is over- and under-valued, giving some insights into what might happen in the coming months.

DeltaCap is a ‘hybrid indicator’, part fundamental, part technical. It’s the difference between two moving averages. DeltaCap = RealisedCap – AverageCap.

RealisedCap is the price of UTXOs – coin outputs – at the point they last moved.

AverageCap is the cumulative simple moving average of the whole market cap of bitcoin.

DeltaCap, the difference between the two, generally tracks below bitcoin’s price but occasionally touches it at the end of bear markets. That has happened three times so far: at the end of 2011, at the start of 2015, and at the end of 2018. Puell makes it clear that price touching DeltaCap doesn’t guarantee bitcoin has bottomed, only that the bottom is close to these points.

DeltaCap approaches RealisedCap at bubble tops, and approaches AverageCap just ahead of price breakouts.

The good news? If this pattern continues, people will have lots of time to buy up. The bad news? This bear-to-sideways market may last for an unprecedented while, going as far as projecting a post-accumulation breakout as late as Q2, 2020 — the moment when it could be expected for delta cap to get nearest to average cap if the extension of these lines continues as-is. Bear in mind that this is all pending on the overall rate of drop of realized cap and the rate of rise of average cap — local price action, velocity, and dormancy are all in play. Time domain here is still a broad estimate.

The second metric is TopCap, which aims to show where the top of a bull market might be. TopCap = AverageCap * 35.

Together, TopCap and DeltaCap provide a band of activity within which bitcoin moves, a little like a Bollinger Band. That TopCap indicator currently stands just under $50,000, though by the time we get there, says Willy Woo, it will likely be more like $90,000.

Call it a nice round $100,000?

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