Bitcoin (BTC) is still at the “low end” of a 2021 bubble, new data tracking miner and investor behavior suggests. 

In the latest signal that BTC price action still has major growth potential, researcher Geert Jan Cap showed bullish signs coming from Bitcoin’s thermocap.

Thermocap suggests Bitcoin just getting started

Thermocap is a metric which aims to track Bitcoin price cycles based on actions taken by miners and investors with regards to buying and selling BTC.

It employs the so-called thermocap multiple, which divides the Bitcoin price on a certain day by the cumulative block subsidy, or all rewards earned by miners from day one.

The resulting value gives an insight into how profitable it is to sell at a given price point, and therefore why price volatility may have ensued at various times in Bitcoin’s history.

“It shows when a bubble in the price was present with a very high signal to noise ratio,” an introduction to the metric explains, adding that thermocap also “enables comparison of the bubble peaks” and “appears to show a relatively constant value of the multiple for ‘healthy’ price levels” among other benefits.

As of Jan. 17, 2021, Bitcoin’s thermocap multiple stood at 17.5, down from a recent high of 20 earlier in the month.

Given that bubble activity historically occurs between 16 and 60, it is immediately apparent that Bitcoin still has considerable room to explore this bull cycle.

Bitcoin thermocap vs. BTC/USD chart. Source: Geert Jan Cap/ Twitter

“We're still in the low end of the '21 bubble phase,” Cap summarized in accompanying Twitter comments.

Weak hand sell-offs define BTC bear markets

In terms of how hodlers cause and react to price events, meanwhile, statistician Willy Woo believes that a cycle of weak hands selling during every bear market in Bitcoin’s lifespan is a provable phenomenon which takes precedence over changing narratives.

On Sunday, Woo highlighted Bitcoin’s realized price — U.S. dollars stored in the network — being higher than the spot price during bottoms both in late 2018 and March 2020. In the former instance, BTC/USD fell 85% versus its prior top near $20,000.

“Weak hands (buyers who buy under FOMO) always capitulate allowing strong handed thoughtful buyers to get bargains,” he commented.

“This happens in EVERY bear cycle.”
Bitcoin realized price chart. Source: Willy Woo/ Twitter

The comments are particularly timely given recent market trends as Bitcoin climbed to $42,000, sold off to $30,000 and then hit $40,000 once more, all within a week.

As Cointelegraph reported, data highlighted small-balance wallets decreasing, while the number of wallets with a balance of 1,000 BTC or more grew. A transfer of bitcoins from small investors to whales was in progress, analysts warned, appealing to sellers not to part with their funds during such volatile conditions.

“The narrative for each bear and bull market changes cycle to cycle, but the effective mechanism is the same,” Woo concluded.

“I've found little value reading market news and industry narratives, IMO tracking capital flows in relation to the behaviour patterns of participants is better.”