An analyst has pointed out how Bitcoin is back above the cost basis of the short-term holders, a sign that can be bullish for the asset.
Bitcoin Is Back Above The Realized Price Of Short-Term Holders
As explained by CryptoQuant community manager Maartunn in a new on X, BTC has reclaimed the Realized Price of the short-term holders. The “Realized Price” here refers to an indicator that, in short, keeps track of the average cost basis of the investors in the Bitcoin market.
When the value of this metric is greater than the cryptocurrency’s spot price, the average holder in the sector can be assumed to be carrying some unrealized profit. On the other hand, the indicator being under the BTC price implies the dominance of losses in the market.
In the context of the current discussion, the Realized Price of the entire userbase isn’t of interest, but that of only a part of it: the short-term holders (STHs). The STHs refer to the Bitcoin investors who purchased their tokens within the past 155 days.
This cohort makes up one of the two main divisions of the BTC sector based on holding time, with the other part of the market being known as the long-term holders (LTHs).
Now, here is a chart that shows the trend in the Bitcoin Realized Price specifically for this cohort over the past year:
The price of the asset appears to have surged above this line recently | Source:
As is visible in the above graph, the Bitcoin spot price had plunged under the Realized Price of the STHs last month, meaning that this group had gone into a state of net loss.
After spending some time below the line, though, the cryptocurrency has risen above the metric with the latest rally, thus bringing this cohort back into profit.
“This is usually a very bullish sign,” notes Maartunn. The chart shows that the last time the asset broke back above this level after an extended stay below it was last October. This surge back above the line kicked off a run that would eventually result in the coin setting a new all-time high (ATH).
As for why BTC breaking above the STH Realized Price has historically been something bullish, the answer lies in investor psychology. The STHs, who are relatively inexperienced hands, can be sensitive to price movements. More specifically, they are likely to show a reaction when their average cost basis undergoes a retest.
When these investors are bearish, they may decide to sell when the price rises to their cost basis, as they may worry that the surge won’t last. Similarly, they react by accumulating further instead during bullish periods, as they could see their cost basis as a profitable point for buying more.
As BTC has been able to surge past this line recently, it wouldn’t appear that the STHs are offering resistance right now, and thus, a bullish sentiment is still dominant among them.
BTC Price
Bitcoin had recovered above $66,000 yesterday, but the coin has since seen some pullback as its price is now down to $64,800.
Looks like the BTC price has surged overall in the last few days | Source:
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
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Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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