Original Article Title: "On-Chain Data Learning Center (VI): A Brand New, Ark-Engaged $BTC Magical Pricing Methodology (I)"

Original Article Author: Mr. Berg, On-Chain Data Analyst

This article is the sixth in the On-Chain Data Learning Center series, with a total of 10 articles. Take you step by step to understand on-chain data analysis. Interested readers are welcome to follow this series of articles.

Related Reading: "On-Chain Data Learning Center (V): How many people are really making money? Five minutes to understand the objective sentiment indicator PSIP"

TLDR

- The Cointime Price series consists of three articles, with this article being the first.

- Introducing the basic principles and bottom-scanning applications of Cointime Price.

- Cointime Price is a new and efficient $BTC pricing method.

- It is stricter than Realized Price and more sensitive than LTH-RP.

I. Introduction to Cointime Price

The concept of Cointime Price originated on 2023/08/23, proposed by "Cointime Economics," a collaboration between Ark Invest and Glassnode.

The calculation logic of Cointime Price is relatively complex, and this article will try to introduce the principles in a simple and understandable manner.

Cointime Price = A pricing model designed for the unique UTXO structure of $BTC

In traditional pricing methods, BTC, as a blockchain network, involves a validation process for both block generation and transaction transfers. However, unlike traditional pricing methods, Cointime Price adopts a "time-weighted" calculation approach.

Cointime Price Calculation Logic (as shown in Figure 2, the green line represents Cointime Price)

The Cointime Price calculation involves three key concepts:  

· Coin Blocks Created (CBC):

CBC = The total circulating BTC supply when Block N is generated.

· Coin Blocks Destroyed (CBD):

When BTC is transferred, it is considered destroyed. The calculation is: Transferred BTC amount × Holding Time (number of blocks elapsed), resulting in CBD (time-weighted BTC amount).

· Coin Blocks Stored (CBS):

CBS = CBC - CBD, which can be understood as the "total time-weighted BTC amount not spent."

In the formula calculation, the numerator's Cointime Value Destroyed is obtained by multiplying CBD by the BTC price at the time of transfer, resulting in the "BTC U-value at the time of the transaction."

· Key Features of Cointime Price

· Time-weighted design: When long-term holders transfer a significant amount of BTC (distribute), the Cointime Price change rate will accelerate.

· Buyer's perspective analysis:  The numerator in the formula represents the "total time-weighted spending in the market," dividing it by CBS to obtain the market's time-weighted average cost of chips.

· Excluding lost chip impact: Since CBD calculates transfer behavior, BTC that has not been transferred is not included, and thus will not be affected by ancient lost BTC.

II. Comparison with LTH-RP

In a previous article, I introduced LTH-RP (Long-Term Holder's Average Holding Cost). Interested readers can refer to this tweet:  [LTH-RP Introduction](https://x.com/market_beggar/status/1864600434129948724)  

LTH-RP vs. Cointime Price

· Calculation Method of LTH-RP:

- Glassnode defines LTH as BTC held for>155 days

- LTH-RP = Average cost of these LTH BTC

- Limitation: Targeted at long-term holders only, a relatively rough definition.

· Calculation Method of Cointime Price:

- Considers the holding time of each BTC transfer directly

- More precise and sensitive than LTH-RP

Performance of Cointime Price vs. LTH-RP in Market Trends

As shown in Figure 3, before each major market uptrend, Cointime Price always reacts earlier than LTH-RP, better reflecting the real-time occurrence of chip distribution behavior.

Therefore, in my personal analysis, I prefer to use Cointime Price for market judgment. The top model I designed in my weekly market report also includes the Cointime Price indicator.

III. Application One: Buying the Dip

Cointime Price = Time-weighted fair valuation of BTC, so when the market price falls below the Cointime Price, it means the market price is below the true value of BTC, usually a good buying opportunity.

· Historical Data Validation

As shown in Figure 4, I have marked the times when the BTC price was below the Cointime Price, and these moments are often good entry points.

Original Article Link

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