Popular on-chain analyst Willy Woo has a “max pain” model for Bitcoin that suggests a floor price for BTC at the bottom of its bear market.
Woo tells his one million Twitter followers that he’s estimating a Bitcoin bottom by looking at where BTC’s price would be if 58% to 61% of all coins would be below the price of purchase, or at a loss.
“Bitcoin bottom is getting close under the Max Pain model.
Historically BTC price reaches macro cycle bottoms when 58%-61% of coins are underwater (orange).
Green shading adjusts for the coins locked up inside GBTC Trust.”
Source: Willy Woo/Twitter Looking at the zoomed in view of the chart, the model appears to be suggesting that Bitcoin can still drop to around the $12,000 price range.
Source: Willy Woo/Twitter In a separate, less severe model, Woo says BTC is testing a bottom based on CVDD (Cumulative Value Coin Days Destroyed).
Explains Woo,
“When coins pass from old investor to new investor, the transaction carries a USD value and also destroys an amount of HODL time by the previous holder. CVDD is the cumulative sum of this value-time destruction as a ratio to the age of the market and divided by six million as a calibration factor.”
Woo says that the CVDD model is based on the idea that BTC tends to establish a new price floor as a fresh generation of investors enters the market.
“CVDD floor price being tested.
Uses age and value of BTC moving to new investors to create a floor.
Theory: when significantly old coins (say bought at $100) pass to new investors (say at $16,000), the market perceives a higher floor.”
Source: Willy Woo/Twitter
At time of writing, Bitcoin is trading at $16,235, a 76.50% decrease from its all-time high.
