September 29, 2022


Is[in]Crypto takes a look at Bitcoin (BTC) on-chain indicators, focusing this week on reserve risk, balanced price and cumulative value days destroyed (CVDD).

Reserve risk

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

When confidence is high but price is low, reserve risk yields low prices. These times have historically offered the best risk-to-reward ratio.

The risk reserve index fell to a new record low of 0.00099 on July 6. This is the first time in history that the index has fallen below 0.001. So it is possible that a low has been reached.

Historically, BTC’s bottom has been confirmed once the indicator breaks out of the downtrend line (black). For the breakout to be confirmed, the reserve risk must move above 0.002.

CVD

Cumulative Value-Days Destroyed (CVDD) is the ratio of the cumulative value of USD Coin Days Destroyed and the age of the market (in days). Historically, the index has been an accurate indicator of absolute market bottoms. This happened in 2015, 2019 and 2020 below (black circle).

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

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

So when you compare it to the previous lows, this means that either the bottom has been reached or that BTC will drop to $15,000 once again before the drop. However, a touch of $15,000 is unlikely, as BTC has historically bounced before reaching the CVDD line.

Balanced BTC price

Balanced Price is the difference between Realized Price and Transfer Price. The transfer price is the cumulative sum of Coin Days destroyed in USD, adjusted based on the circulating supply and the total time since Bitcoin was launched.

Historically, the bottom has been reached once BTC falls slightly below the indicator before recovering it (black circle).

In the current decline, BTC reached the equilibrium price on June 18 and recovered thereafter.

Similar to CVDD, this indicator indicates that either a bottom has been reached or that there will be a final decline before the bottom.

Balanced price
Balanced price chart by Glassnode

For Be[in]Crypto’s latest Bitcoin (BTC) analysis, click here

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