Top Cap and Delta Cap: New Metrics for Spotting Bitcoin Price Trend Reversals

"Sample sizes are small in the cryptocurrency markets, with the oldest, bitcoin, having existed just 10 years, but two of the newly released metrics termed"Top Cap" and Delta Cap" have shown to be effective at identifying the tops and bottoms of bitcoin's wild market cycles thus far.

Average cap = "Cumulative sum of daily market cap values / age of the market in days."

That is touted for offering p.rice support and resistance, the delta cap has shown to have the same effect by providing price support at roughly $2.50, the bottom in 2011, and $176, the bottom in 2015.

As can be seen above, delta cap is making a case for bitcoin having bottomed out once again, a point made evident by the fact that its price bounced off of the metric during its drop to $3,200 at the end of 2018,.

Delta cap may be pointing to bitcoin's market leaving its bearish trend, but there could be more nuance to the situation than first meets the eye.

Bitcoin has only ever bottomed out and escaped one of its infamous bear markets after the delta cap and average caps have collided with eachother, or came very close to it, as can be seen in both 2011 and 2015.

At the time of writing, delta cap is about $1,600 higher than the average cap, theoretically suggesting bitcoin's price will either have to wait for the average cap to rise and meet the delta cap, or the delta cap will need to fall to meet the average cap by way of more significant market depreciation before a true bottom can form.

Proposed by Woo in collaboration with Puell, top cap aims to achieve the opposite of the delta cap, in that is has been experimentally configured to pinpoint the tops of bitcoin's explosive bull markets.

Most recently, bitcoin's price came in contact with the top cap when its market reached peak euphoria and an all-time high near $20,000 in 2018.

Currently located at $48,724, the top cap paints a rosy picture for the future of bitcoin if it indeed endures another boisterous bull market, although the creator Woo thinks.