Short-term Bitcoin holder cost base rises to $25.3k

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Istanbul, Turkey – April 28, 2022: Human hand putting bitcoin in wallet

On-chain data shows that the short-term cost base for Bitcoin holders has now risen to $25,300; here’s what it tells us about the market.

Bitcoin’s short-term holder cost base has increased recently

According to data from on-chain analytics firm Glassnode, the average acquisition price for short-term holders continues to approach the spot price. The relevant indicator here is the realized price, a measure derived from the realized cap.

The realized price is a capitalization model for Bitcoin that places the actual value of each coin in circulating supply as the price it was last moved to on the blockchain, rather than the current spot price as it does. normal market capitalization.

The realized price is obtained when this ceiling is divided by the total number of coins in circulation. Since the realized cap represented the investors’ cost base (the price at which they purchased their coins), the realized cap signifies the value at which the average investor in the market acquired their BTC.

The realized price can also be set explicitly for certain parts of the market. Generally, BTC investors are divided into two main groups: short-term holders (STH) and long-term holders (LTH).

STHs include all investors who have held their coins for less than 155 days, while LTHs have those who have held for more than that threshold.

Now, here is a graph that shows the trend of the realized price of Bitcoin for the whole market, as well as the versions of the metric for STH and LTH, over the past few years:

The cost base of different market segments | Source: Glassnode on Twitter

As shown in the chart above, the realized price of Bitcoin (for the entire market) is currently around $20,100, which means the average investor bought their coins at this price.

The price realized in the markets has had historical significance for the asset, acting as a transition mark between bear market lows and bulls throughout the cycles. Typically, during bear markets, this level acted as resistance, while during bull markets, it supported the price.

This level is unrelated to the spot price because it is an important psychological point for investors. As this is the price at which they bought, holders would prefer to sell at this price during bear markets to avoid losses.

In full-fledged bull rallies, however, Bitcoin investors would see this level as a preferable point to accumulate more, thus explaining why it can act as support in such periods instead.

Similarly, the cost base of STH and LTH also acted as resistance and support. The various interactions of the realized price of STH are most visible during the 2021 bull run in the chart.

The realized price of STH also increased as the current rally continued. This is normal behavior seen during uptrends in the price, as STHs only include investors who bought most recently. Since the most recent spot prices would increase during these periods, the group’s cost base would also naturally increase as new holders joined.

This level is around $25,300, close to the spot price. It will be interesting to see how the spot price may interact with this line if BTC sees an extended downtrend soon. Such a retest would be a positive sign if successful, as this behavior would align with historical bull markets.

BTC price

As of this writing, Bitcoin is trading around $28,200, down 1% in the past week.

BTC surged today | Source: BTCUSD on TradingView

Featured image of Kanchanara from Unsplash.com, charts from TradingView.com, Glassnode.com

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