Average Cap
Life-to-date cumulative moving average of Market Cap — smooths out short-term volatility to reveal the long-term fair value trajectory of Bitcoin's network
| Property | Value |
|---|---|
| Category | Valuation Metrics |
| Unit | USD |
| Resolution | 1d |
| Assets | BTC |
| Tier | Basic |
| API Endpoint | GET /v1/holder/valuation |
| Field | average_cap |
Overview
Average Cap is the life-to-date cumulative moving average of Bitcoin's Market Capitalization. By averaging all daily Market Cap values from the genesis block to the present, Average Cap filters out speculative volatility and bubble-driven price spikes to reveal the organic growth trajectory of Bitcoin's network valuation over time.
Unlike Market Cap, which reacts to every price swing, Average Cap moves slowly and deliberately, reflecting the true long-term trend of capital flowing into the Bitcoin network. It serves as a fundamental baseline or "fair value" reference point, helping analysts distinguish between sustainable growth and temporary overvaluation.
Average Cap is closely related to other valuation models like Realized Cap, Thermo Cap, and Delta Cap, and is often used in conjunction with them to build comprehensive valuation frameworks.
Formula
Where:
- Market Capᵢ — the total market capitalization of Bitcoin on day i (price × circulating supply)
- N — the total number of days from genesis to the current date
- The sum accumulates every daily Market Cap value from the very first day of Bitcoin's existence
Interpretation
- Average Cap rises steadily over time as Bitcoin's adoption grows, reflecting the long-term accumulation of network value independent of short-term price action
- When Market Cap is far above Average Cap, it suggests the market is in a speculative bubble or overheated phase — historically, extreme deviations have preceded major corrections
- When Market Cap approaches or falls below Average Cap, it indicates deep undervaluation — these periods have historically represented generational buying opportunities
- The ratio of Market Cap to Average Cap can serve as an oscillator: high ratios indicate overvaluation, while low ratios signal undervaluation
- Average Cap can be combined with Delta Cap (Average Cap minus Realized Cap) to identify absolute market bottoms, as Delta Cap tends to act as an ultimate support level
Use Cases
- Long-term fair value estimation: Average Cap provides a smoothed baseline that filters out speculative excesses, useful for estimating Bitcoin's fundamental valuation trend
- Identifying market cycle tops and bottoms: Extreme deviations between Market Cap and Average Cap historically coincide with cycle peaks (far above) and troughs (convergence or crossing below)
- Building composite valuation models: Average Cap is a key ingredient in Delta Cap (Average Cap − Realized Cap), which has proven effective at identifying absolute cycle bottoms
- Risk management and position sizing: Investors can use the Market Cap / Average Cap ratio to adjust portfolio exposure — reducing risk when the ratio is elevated and increasing it when compressed
- Comparing against other capitalization models: Plotting Average Cap alongside Realized Cap, Thermo Cap, and Market Cap reveals the hierarchy of valuation layers and helps contextualize where Bitcoin sits in its macro cycle
API Usage
curl -H "Authorization: Bearer YOUR_API_KEY" \
"https://api.blocklens.co/v1/holder/valuation?start_date=2024-01-01&end_date=2024-12-31&limit=365"
Related Metrics
- Market Cap — Total market cap
- Realized Cap — Sum of LTH + STH realized cap
- Thermo Cap — Cumulative miner revenue at time of issuance — measures the total cost basis of all mined Bitcoin valued at the price on their creation date
- MVRV — Ratio of market value to realized value across all holders