Cointime Cap reflects the aggregate cointime-weighted realized value stored within the network. It is both a network time-weighted and volume-weighted capitalization model. It can be considered as the relative balance between the willingness of the market to spend time and value against the willingness of asset holders to keep owned coins and value inactive.
A series of pricing models may be derived directly from the Cointime Economics framework, the most foundational of which is the Cointime Price, as well as the Cointime Cap. These valuation models are based on the notion that all coinblock destruction reflects an economic decision and indicates that the spent coins are indeed active, non-lost, and thus are participating in the global Bitcoin economy.
The network total coinblock-value destroyed is distributed across the remaining cointime volume stored in the system. This nets Cointime Price, which is the Cointime Economics analogue of the UTXO derived Realized Price.
Cointime Price = cumsum(Cointime Value Destroyed) / cumsum(coinblocks stored)
With Cointime Price capturing a network-time-and-volume weighted average price, we can calculate a network valuation metric by multiplying by Circulating Supply. This nets the Cointime Cap, which may be considered the Cointime Economics analogue of the UTXO derived Realized Cap.
Cointime Cap = Cointime Price * Circulating Supply
In effect, the Cointime Cap represents a lower bound valuation model for Bitcoin which accounts for the following:
This metric was developed within the Cointime Economics framework for Bitcoin. This project was a joint venture between Glassnode and ARK Invest, with full details available in two formats: an overview primer (Version I published via ARK) and a comprehensive guide for specialists (Version II published via Glassnode).