On-chain data shows that the average short-term Bitcoin holder is back in profit as BTC continues strong bullish momentum.
Bitcoin is now above the short-term headline realized price
According to the data of the on-chain analysis company glass node, the price of BTC is now above the average cost basis of short-term holders. The relevant indicator here is the “realized price”, derived from the concept of a “realized cap”.
The realized cap is a capitalization model for Bitcoin that aims to find some kind of “true” value for BTC by putting the value of each coin not at the current BTC price (as is the case in the normal market cap). but at the price at which the currency was last transferred.
When the usual market capitalization is divided by the total number of coins in circulation, the price of BTC is returned (a fact that is not in the least surprising, since the market capitalization is calculated by multiplying the price by the total number of coins). coins, to begin with). If the same idea is applied to the realized cap, a “realized price” can be obtained.
This price is significant because it represents the average cost basis (i.e., the price at which the average holder purchased their coins) in the Bitcoin market. This means that if the regular price falls below the realized price, it is fair to conclude that the average investor is at a loss.
The Bitcoin market is mainly divided into two groups of holders: the “short-term holders” (STH) and the “long-term holders” (LTH). STHs include investors who purchased their coins in the last five months (155 days, to be more precise), while anyone holding coins longer falls into the LTH cohort.
Now, here’s a chart showing the trend in price realized for the entire market, as well as for these two sets of holders separately, over the past several years:
Looks like the LTH realized price is the highest at the moment | Source: Glassnode on Twitter
As shown in the chart above, Bitcoin topped STH’s realized price of $17.8k on the latest rally, meaning the average investor who bought in the last five months is now back in the green. On the other hand, the average LTH is still well below the current level, as its base cost is over $20k.
BTC is now heading towards the realized market price of $19.7k. Historically, this level has provided resistance during bear markets, and a real advance above the level has generally resulted in a return to bullish momentum.
Whether Bitcoin can break above this resistance this time remains to be seen, assuming the rally continues long enough to retest the level.
Bitcoin price
At the time of writing, Bitcoin is trading around $19,200, up 14% in the last week.
The value of the crypto seems to have shot up | Source: BTCUSD on TradingView
Featured Image of Kanchanara on Unsplash.com, Charts from TradingView.com, Glassnode.com
