Bitcoin Price Prediction Using Delta Cap

Bitcoin is hard or impossible to value on its fundamentals, but Delta Cap is a new indicator developed by David Puell to analyze the price of Bitcoin; based on Willy Woo’s work, with the purpose of determining the bottom of a bear market.

Many market analysts are interested in developing different metrics that correlate well with market activity and provide information for predicting Bitcoin prices. David Puell aims to answer two of the questions that often plague traders: Where is the bottom?, and when is the next uptrend coming?

According to Puell, Delta Cap is a hybrid indicator that is part fundamental and part technical. It uses a formula that measures the difference between two long-term moving averages of the Bitcoin price (Delta Cap = Realized Cap — Average Cap); that is, it is determined by two indicators: Realized Cap and Average Cap:

Realized Cap is the price of the unused coin output (UTXO) when it was last moved. Instead of counting all extracted coins at the current price, the coins are counted with the Bitcoin price of the last time they were moved through the blockchain. This approximates the dollar value paid for all bitcoins in circulation. If a coin has not been moved for 7 years; you know the owner acquired it when it was worth a small fraction of what it is worth today.

Average Cap is the simple (cumulative) moving average for the entire Bitcoin market boundary. Delta Cap provides an excellent reference for locating market funds or at least funds near the floor of bearish cycles. This indicator, which resembles a long-term moving average, can be considered to offer support and resistance to the Bitcoin price.